Bonds issued at a premium
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Default risk premium for AAA bonds = 3%. Liquidity premium for long-term T-bonds = 2%. Assume that a highly liquid market does not exist for long-term T-bonds, and the expected rate of inflation is a constant. Given these conditions, the nominal risk-free rate for T-bills is , and the rate on long-term Treasury bonds is . a. 4%; 14%. b. 4%; 15%
[DOC File]1 - Digital Learning & Online Textbooks – Cengage
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The bonds were issued at a premium. In the fire station capital projects fund, the premium should be transferred to: A. an agency fund. B. a special revenue fund. C. a debt service fund. D. an expendable trust fund. 12. The City of Fargo issued general obligation bonds to finance construction of …
[DOC File]CHAPTER 1
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Our state recently issued transportation bonds at a significant premium and is considering spending that premium on transportation projects rather that setting it aside for the debt service and thereby lowering the true interest cost on those bonds. Amounts normally appropriated for transportation projects in the state budget would therefore be ...
[DOCX File]State Agency - NASACT
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The 10% contract rate is greater than the 8% market rate; therefore, the bonds are issued at a premium. 4. Estimation of the market price at the issue date: Cash Flow Table Table Value* Amount Present Value Par (maturity) value B.1 0.6756 $150,000 $101,340 Interest (annuity) B.3 8.1109 7,500 60,832 Price of bonds $162,172 ...
[DOC File]CHAPTER 15
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LO3 Record bonds issued at face value and at a discount or premium. Bondholders pay face value for bonds when the interest rate on the bonds approximates the market rate for similar investments. The issuing corporation records the bond issue at face value as a long-term liability in the Bonds …
Learn About Bonds Issued At A Premium | Chegg.com
When bonds are issued at a premium, the journal entry consists of a debit to Cash, a credit to Unamortized Bond Premium, and a credit to Bonds Payable. Unamortized Bond Premium is added to Bonds Payable on the balance sheet to produce the carrying value. The carrying value decreases as the premium is amortized and equals the face value of the ...
[DOC File]Bonds, Study Guide
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31. Stone, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that. a. the effective yield or market rate of interest exceeded the stated (nominal) rate. b. the nominal rate of interest exceeded the market rate. c. the market and nominal rates ...
[DOC File]Chapter 18 Governmental Entities: Special Funds and ...
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Convertible bonds are securities that are convertible into shares of common stock, at a fixed price, at the option of the bondholder. Convertibles have a lower coupon rate than nonconvertible debt, but they offer investors a chance for capital gains in exchange for the lower coupon rate. Bonds issued with warrants are similar to convertibles.
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