Bonds

Related BrainMass Solutions

• The expected rate to issue new bonds

  YTM on BBB bonds = 11.5% Long-term risk-free government bonds = 8.7% Risk premium on BBB bonds = 11.5%-8.7%=2.8% Current risk premium = 50%*2.8%=1.4% Current long-term risk-free government bonds = 7.8% Current YTM on BBB bonds = 7.8%+1.4%=9.2%

• Municipal bonds

  The default risk on municipal bonds exceeds that on treasury bonds. C. The liquidity of municipal bonds exceeds that of treasury bonds. D. Default-free treasury bonds include more income tax breaks relative to municipal bonds. A.

• Bonds Payable

  139576 Bonds Payable 23.

• Straight Line Method and Bond Terminology

  Listed below are common terms associated with bonds: a. Bond certificate b. Bond issue c. Bond indenture d. Unsecured bonds e. Debenture bonds f. Secured bonds g. Term bonds h. Serial bonds i. Registered bonds Required 1.

• Convertible bonds and stock warrants

  Since the bonds are convertible bonds, there is no relevance of the price if the bonds were not convertible. 3.

• Bond Valuation

  The current-risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the risk-free long-term government bonds are currently yielding 7.8%, then at what rate should Rollincoast expect to issue new bonds?

• Entries to Record Issuance of Bonds, Interest Accrual, and Bonds

  111435 Prepare entries to record issuance of bonds, interest accrual, and bond redemption Hornung Electric sold $300,000, 10%, 10 yr bonds on Jan. 1, 2006. The bonds were dated Jan. 1 and paid interest on Jan 1 and July 1.

• Using Straight-Line Amortization to Compute the Gain/Loss

  Since bonds are purchased on discount, the discount would be amortized over the life of the bond Face Value of Bonds $3,000,000 Purchase Value of Bonds $2,946,000 Discount on Bonds $54,000 We are using straight

• Southeast Airlines Bonds

  Liabilities Long-term debt (bonds) 400,000 Accrued interest on Bonds 36,000 Premium on Bonds payable 18,000 Interest payable 18,000 (c) On January 1, 2007 when the carrying value of the bonds was $416,000 the company redeemed the bonds

• Corporate vs. government bonds

  However, it is also noteworthy that government bonds usually have a lower return than corporate bonds and in most cases government bonds are considered less risky. Further, many government bonds are partially to fully tax exempt. 2.