Homework_9_Chap_10__Fall_2009_Solution-1 - Homework #9...

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Homework #9 Chapter 10 Homework Problems E10-1 Bond Terminology: Fill in the Missing Blanks LO1 1. The bond principal is the amount (a) payable at the maturity of the bond and (b) on which the periodic cash interest payments are computed. 2. Par value is another name for bond principal, or the maturity amount of a bond. 3. Face value is another name for principal, or the principal amount of the bond. 4. The Stated Rate is the rate of cash interest per period stated in the bond contract. 5. A debenture is an unsecured bond; no assets are specifically pledged to guarantee repayment. 6. Callable bonds may be called for early retirement at the option of the issuer. 7. Convertible bonds may be converted to other securities of the issuer (usually common stock). E10-5 Computing Issue Prices of Bonds for Three Cases LO2, 3, 4 Wilson Corporation is planning to issue $1,180,000 in bonds that mature in 2 years and pay 6 percent interest each June 30 and December 31. All of the bonds will be sold on January 1, 2009. Required: Compute the issue (sale) price on January 1, 2009, for each of the following independent cases: 1. Case A : Market (yield) rate, 4 percent. 2.
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Homework_9_Chap_10__Fall_2009_Solution-1 - Homework #9...

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