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Unformatted text preview: rate method The method of amortizing discounts and premiums that provides for a constant rate of interest on the carrying amount of the bonds at the beginning of each period; often called simply the interest method. Effective rate of interest The market rate of interest at the time bonds are issued. Installment note A debt that requires the borrower to make equal periodic payments to the lender for the term of the note. Market rate of interest The rate determined from sales and purchases of similar bonds. Mortgage notes An installment note that may be secured by a pledge of the borrower's assets. Number of times interest charges are earned A ratio that measures creditor margin of safety for interest payments, calculated as income before interest and taxes divided by interest expense. Premium The excess of the issue price of a stock over its par value or the excess of the issue price of bonds over their face amount....
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This note was uploaded on 10/05/2010 for the course ACCOUNTING n/a taught by Professor N/a during the Summer '09 term at Kaplan University.
- Summer '09