Bonds at a discount vs premium
[DOC File]Accounting for Bonds For each of the following situations ...
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Premium on Bonds Payable $66,243. Bonds Payable $1,000,000. 12/31/16 Interest Expense $85,299. Premium on B/Payable $14,701. Cash $100,000. 2) Bee Gee Movie, Inc. will issue a $1 million bond offering on January 1, 2016 to finance an upcoming motion picture thriller entitled “Chasing the Accounting Dream”.
[DOC File]Chapters 10&11 - Debt Securities
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The required rate of return serves as the discount rate. Premium bonds vs. discount bonds. A premium bond sells for more than its face value ($1,000) A discount bond sells for less than its face value ($1,000) Annual interest payment valuation model. P = present value of coupons + present value of par value = C (PVIFAr,n) + PV (PVIFr,n),
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34. When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will. a. increase if the bonds were issued at a discount. b. decrease if the bonds were issued at a premium. c. increase if the bonds were issued at a premium. d. increase if the bonds were issued at either a discount or a premium. 35.
[DOC File]FIRST PRINCIPLES OF VALUATION
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Bonds will sell at Face Value, at a Discount, or at a Premium. Face Value: Bonds sell at face value when market interest rates for similar bonds are the same as the coupon on the bond. Example: A $1000, 10-year bond with a 9% coupon rate, will sell at $1000 when similar bonds are yielding 9%.
[DOC File]Bonds, Instructor's Manual
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Brokers typically quote the yield to call for bonds selling at a premium because, since a premium means that the coupon rate is above the current market rate, the bond is likely to be called. They quote the YTM on par and discount bonds. 4-2 Interest rate risk. is the risk that a bond’s price will decline due to an increase n interest rates.
[DOC File]Chapters 1&2 - Investments, Investment Markets, and ...
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1. Characteristics of bonds. Coupon rate and interest payment . Maturity date . Call provision . Call premium and call price . Face value . Zero coupon bonds . Required rate of return – discount rate, i/y. 2. Interest rate risk: price risk vs. reinvestment risk. Interest rate price risk: risk that the bond price will fall if interest rates rise
[DOCX File]References - International Actuarial Association
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Sep 26, 2017 · If the entity uses the premium allocation approach and the entity applies the discount rate it is the locked in rate determined on initial recognition (as per IFRS 17.57 (b) and IFRS 17.59 (b)). However, if in this case the group of insurance contracts is onerous the fulfilment cash flows are also discounted at the locked in rate.
[DOC File]Chapter 8
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A Discount Bond sells below par; A Premium Bond sells above par. If market rates are higher than the bonds stated rate, it’s a discount bond. If market rates are lower than the bonds stated rate, it’s a premium bond. Journalizing Bonds: Face-Value Bonds, page 484. Discount Bonds, page 485 & 499. Premium Bonds, page 487 & 500. Bond Retirement, page 488
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