Learnsmart Ch. 9
2 types of financing
debt and equity
Equity
financing refers to obtaining investment from stockholderts
Bonds will be issued at a premium if the stated interest rate is:
Greater than the market interest rate
_______ bonds are supported by a specific asset the issuer pledges as collateral.
Secured
______ bonds require payment of the full principal amount of bond at end of term loan.
Term
The _______ interest rate is used to compute the cash interest paid to the bond holders.
stated
The _______ interest rate is the interest rate on the date the bonds are issued.
Market
The current balance of bonds payable is aka
bonds' carrying value
Most corporate bonds pay interest...
semi annually
Default Risk
The possibility that a company will be unable to pay its bonds payable and the related interest when due.
Lease
a contractual agreement in which an owner provides a user the right to use an asset for a specified period of time.
Convertible bonds are retired when
the bondholder exchanges them for the issuing company's stock.
Debt to Equity
total liabilities/stockholder equity