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Unformatted text preview: business, or within a year if there are several cycles within a year. 2. Long-term creditors normally have no vote in management affairs and only receive a stated rate of interest regardless of the level of earnings. 3. Covenants or restrictions on the borrower for the protection of the lenders are stated in the bond indenture or note agreement. B. Bonds Payable 1. Discuss the different types of bonds such as term bonds, serial bonds, secured and unsecured bonds, convertible bonds, commodity backed bonds, deep discount bonds, guaranteed and income bonds, registered and coupon bonds. 2. Accounting for the issuance of bonds 3. Discount and premium on bonds a. Stated, coupon, or nominal rate of interest: the interest rate written in the terms of the bond indenture. b. Effective yield, or market rate: the interest rate actually earned by the bondholders. c. A premium (discount) exists when the market rate is lower (higher) than the stated rate....
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- Spring '10