When a company issue an interest bearing note the amount of assets it receives upon insurance of the note generally equals?

When a company issue an interest bearing note the amount of assets it receives upon insurance of the note generally equals?

signs a $100,000, 12\%, four-month note maturing on January 1. When a company issues an interest-bearing note, the amount of assets it receives generally equals the note’s face value.

Which of the following illustrates the difference between a secured and an unsecured bond?

Which of the following illustrates the difference between a secured and an unsecured bond? Secured bonds have specific assets pledged whereas unsecured bonds are issued against the general credit of the borrower.

What are the characteristics that distinguish a zero coupon bond?

TestNew stuff! : What are the characteristics that distinguish a zero coupon bond? A : Zero coupon bonds do not pay interest, cash is only received at the maturity date by the bondholder, and an investor would not likely pay face value for the bond.

Which of the following are included on a bond certificate?

Definition: A bond certificate is a document that states the details of the bond including the bond issuer’s name, the bond par value or face amount, the interest rate, and the maturity date.

What do liquidity ratios measure?

Liquidity ratios measure a company’s ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio, quick ratio, and operating cash flow ratio.

How would a company use information about the relationship between current assets and current liabilities?

The ratio that relates current assets to current liabilities is the current (or working capital) ratio. The current ratio indicates the ability of a company to pay its current liabilities from current assets, and thus shows the strength of the company’s working capital position.

Who benefits from a secured bond?

A secured bond gives the investor first rights to certain collateral in case the issuer defaults on the payments. Utilities and municipalities often issue secured bonds. They offer slightly less interest in return for their greater safety.

Why might an investor choose to buy a secured bond rather than an unsecured bond?

Because they are backed with specific collateral, secured bonds are perceived as safer investments than unsecured bonds. Because they are perceived as safer, they typically pay lower interest rates. Secured bonds are favored by those who want to protect their investment capital.

Do companies issue zero-coupon bonds?

Federal agencies, municipalities, financial institutions and corporations issue zero-coupon bonds. One of the most popular zeros goes by the name of STRIPS (Separate Trading of Registered Interest and Principal Securities).

What if you are the finance manager of a company how would you determine a zero-coupon bond price?

The basic method for calculating a zero coupon bond’s price is a simplification of the present value (PV) formula. The formula is price = M / (1 + i)^n where: M = maturity value or face value. i = required interest yield divided by 2.

What are the 4 features of a bond certificate?

The bond certificate usually had information on the front that included: The issuer’s name: The name of the governmental body or business issuing the bonds. The face value: The amount the bondholder would be repaid when the bond matured. Interest rate: The rate of interest the issuer paid the bondholders.

What three things are stated on a bond certificate?

the stated interest rate, the face value of the bond, and the maturity date.