Bonds Issued in a Series So That a Specified Amount

question 10

Multiple Choice

Bonds issued in a series so that a specified amount of the bond matures each year are called

• A) term bonds.
• B) serial bonds.
• C) convertible bonds.
• D) callable bonds.

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Definitions:

Unamortized Premium

The portion of the bond premium that has not yet been amortized or gradually written off over the lifetime of the bond.

Liabilities Section

Part of a balance sheet that reports obligations the company owes to outside parties, including debts, loans, and other financial obligations.

Effective Interest Method

A technique used in accounting to allocate the interest expense or income over the life of a financial instrument such as a bond or a loan.

Bond Premium

The amount by which the market price of a bond exceeds its face value, often because it offers an interest rate higher than the current market rates.