ACCT 200 Lecture Notes - Lecture 11: Accrued Interest, Accrual, Contingent Liability
14 Dec 2019
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Document Summary
A form of interest bearing notes payable issued by corporations, universities, and. Sold in small denominations (usually ,000 or multiples of ,000) The bond issuer (the company issuing the bonds) is borrowing money. The bondholder is the investor that is providing the money to the borrower. Issued against the general credit of the borrower. Can be converted into common stock at the option of the bondholder. Can be redeemed prior to maturity at the option of the bond issuer. Provides name of the company issuing bonds, face value, maturity date, and contractual (stated) interest rate. Rate to determine cash interest paid, stated as an annual rate. Rate that investors are currently demanding and receiving on similar investments. The current market price (present value) of a bond is a function of three factors: The amounts to be received (principal & interest) The length of time until the amounts are received.
