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Authoritative Guidance Requires Firms That Account for Notes and Bonds

question 9

Multiple Choice

Authoritative guidance requires firms that account for notes and bonds using the _____ market interest rate to report the carrying values, or book values, on the balance sheet and to disclose the _____ of these notes and bonds in notes to the financial statements.


Definitions:

Effective Annual Yield

This refers to the real return on an investment, taking into account the effects of compounding interest over a year.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, including all payments of interest and principal.

Semi-annually

Semi-annually refers to an event or action occurring twice a year, or every six months.

Coupon Rate

The interest rate stated on a bond when it's issued which indicates the percentage of the principal to be paid annually as interest.

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