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Cards In This Set
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Annuity
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Series of equal payments at equal intervals.
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Bearer Bonds
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Bonds made payable to whoever holds them also called unregistered bonds.
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Bond
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Written promise to pay the bond's par (or face value) and interest at a stated contract rate; often issued in denominazations of $ 1000
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Bond certificate
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Document containg bond specifics such as issuer's name, bond par value, contract interest rate, and maturity date.
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Bond indenture
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Contract between the bond issuer and the bondholders; identifies the parties' rights and obligations.
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Callable Bonds
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Bonds that give the issuer the option to retire them at a stated amount prior to maturity
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Capital Leases
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Long term leases in which the lessor transfers substantially all risk and rewards of ownership to the lessee.
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Carrying (book) value of bonds
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Net amount at which bonds are reported on the balance sheet;equals the par value of the bonds less any unamortized discount or plus any unamortized premium; also called carrying amount or book value
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Contract rate
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Interest rate specified in a bond indenture (or note); multiplied by the par value to determine the interest paid each period; also called coupon rate, stated rate, or nominal rate
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Convertible bonds
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Bonds that bondholders can exchange for a set number of the issuer's shares.
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Coupon bonds
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Bonds with interest coupons attached to their bondholders detach coupons when they mature and presnt them to a banck or broker for collection.
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Debt-to-equity ratio
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Defined as total liabilities divided by total equity; shows the proportion of a company financed by non-owners (creditor) in compariosn with that financed by owners.
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Discount on bonds payable
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Differences betwen a bond's par value and its lower issue price or carrying value;occurs when the contract ragte is less than the market value.
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Effective interest method
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Allocates interest expense over the bond life to yield a constant rate of interest; interest expense for a period is found by multiplying the blance of the liability a the beginning of the period by the bond market rate at issuance; also called interest method
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Installment note
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Liability requiring a series of periodic payments to the lender
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