CRAFT Is an Acronym for ______

question 34

Multiple Choice

CRAFT is an acronym for ______.

• A)Computerized Relative Allocation of Facilities Technique
• B)Centralized Relative Allocation of Facilities Technique
• C)Computerized Relative Assessment of Facilities Technique
• D)Centralized Relative Assessment of Facilities Technique

Understand the calculation and significance of interest payments on bonds.

Comprehend the concepts and financial implications of callable and noncallable bonds.

Grasp the amortization processes of bond premium and discount.

Analyze the reporting of bonds on the balance sheet, including the concepts of carrying amount and amortization effects.

---

Definitions:

Bonds

Long-term securities issued by corporations, municipalities, or governments to raise funds, paying interest to holders.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specified time period.

Callable Bonds

Bonds that give the issuer the right but not the obligation to redeem the bonds before their maturity date, usually at a predefined call price.

Bond Issuer

A bond issuer is an entity, such as a corporation, government, or municipality, that raises funds by issuing bonds to investors, in return for borrowing money over a specified period at an agreed interest rate.