Chase_6615_ch14 - Andrew Chase Intermediate Accounting...

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Andrew Chase Intermediate Accounting Chapter 14 14-1 A corporation might obtain funds through long-term debt by issuing bonds, mortgages, and long-term notes. A bond indenture is a contract that represents a promise to pay a some of money at a designated maturity date, plus periodic interest at a specified rate on the maturity amount. A mortgage is a document that pledges title to property as security for the loan. 14-3 a) yield rate- the rate of interest actually earned by the bondholder b) nominal rate- the interest rate written in terms of the bond indenture c) stated rate- the nominal rate d) market rate- the yield rate e) effective rate- the yield rate 14-4 a) maturity value- the face value of a bond b) face value- the maturity value c) market value- the amount realized upon sale d) par value- the face value 14-5 A discount on bonds payable arises when bonds sell for less than face value when investors feel that the bonds are undervalued. A premium on bonds payable arises when bonds sell for more than face value because investors feel they are overvalued. 14-18 The difference between a fixed-rate mortgage and a variable-rate mortgage is
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Chase_6615_ch14 - Andrew Chase Intermediate Accounting...

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