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10 Cards in this Set
- Front
- Back
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Long-Term Liabilities
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-Probable future expenditures with current obligations that are not payable within the current operating cycle or reporting year, whichever is longer.
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Bond Indenture
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-Document that describes the contact between the issuer (borrower) and bond holders (lenders).
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Face (Par) Value
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-Total dollar amount of the bond and the basis on which periodic interest is paid.
-Bonds are issued at face (par) value when the stated rate equals the market rate. |
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Stated Rate
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-(or Nominal / Coupon Rate) The interest to be paid to the investors. It is specified in the bond contract.
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Market Interest Rate
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-(or the Effective Rate / Yield) Rate of interest actually earned by the bondholder and is the rate of return for comparable contracts on the bate the bonds are issued.
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Discount
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-When Market Rate > Stated Rate, bonds are issued at a discount. They will sell for less than the face amount to make up for the lower return provided.
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Premium
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-When Market < Stated Rate, bonds will be issued at a premium b/c the investor will pay more than the face value due to the higher return offered.
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Bonds
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-Represent a contractual promise by the issuing corporation to pay investors (bondholders) a specific sum of money at a designated maturity date plus periodic, fixed interest payments (usually semi-annually) based on a percentage of the face amount of the bond.
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Debentures
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-Unsecured bonds.
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Mortgage Bonds
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-Bonds that are secured by real property.
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