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15 Cards in this Set
- Front
- Back
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Long term debt?
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probable future sacrifices of economic benefits arising from present obligations that are not payable in one year or the operating cycle.
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Examples of Long Term Liabilities......
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Bonds Payable, long term notes payable, mortgages payable, pension liabilities, and lease liabilities.
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Long Term debt covenant or restriction
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protect both lenders and borrowers. Stated in the bond indenture or note agreement.
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Main purpose of bonds....
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is to borrow for the long term when the amount of capital needed is too large for one lender to supply.
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Bond indenture
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bond contract that represents a promise to pay.
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What is on a bond indenture?
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1. A sum of money at a designated maturity rate.
2. periodic interest at a specified rate on the maturity amount. |
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A bond underwriter uses what two methods.....
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1. underwrite the entire issue by guaranteing a certain sum to the company and assuming all the risk
2. Or sell them with a commisiion |
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secured bonds are.....
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backed by a pledge of some sort of collateral. Ex. Mortgage bond backed by a claim on real estate.
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Unsecured bonds are .....
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not backed by collateral
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A debenture bond is.....
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unsecured. A "junk" bond is also unsecured and very risky.
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Term bonds are....
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bonds that mature on a single date.
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Serial bonds are....
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bonds that mature in installments.
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Callable Bonds give.....
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the issuer the right to call and retire the bonds prior to maturity.
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What are convertible bonds?
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they are bonds that are convertible into other securities of the corporation for a specified time after issuance.
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What are commodity backed bonds (asset-linked bonds)
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they are bonds that are redeemable in measures of a commodity. ex. barrels of oil, tons of coal.
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