答案和详解如下： 21.Which of the following statements for a bond issued with a coupon rate above the market rate of interest is FALSE? A) The bond will be shown on the balance sheet at the premium value. B) The value of the bond will be amortized toward zero over the life of the bond. C) The associated interest expense will be lower than that implied by the coupon rate. D) The bond will sell at a premium. The correct answer was B) The value of the bond’s premium will be amortized toward zero over the life of the bond, not the value of the bond.
22.Which of the following statements about debt is least likely accurate? A) When a bond’s coupon rate is greater than the market rate of return at issuance, the bond’s balance sheet value will be greater than the face value. B) Convertible debt must be treated as equity when computing the firm's debt to equity ratio. C) The book value of a firm's debt will not necessarily equal its market value. D) If a firm issues bonds with detachable warrants, the proceeds must be allocated between the two components on the firm's balance sheet. The correct answer was B) Treating convertible debt as equity is not required but suggested for financial analysis.
23.Assume a city issues a $5 million bond to build a hockey rink. The bond pays 8 percent semiannual interest and will mature in 10 years. Current interest rates are 6 percent. What is the present value of this bond? A) $5,743,874. B) $3,363,478. C) $4,402,886. D) $5,000,000. The correct answer was A) Since current interest rates are lower than the coupon rate the bond will be issued at a premium. FV = $5,000,000 N = 20 I/Y = 3 PMT = (.04)($5,000,000) = $200,000. Compute PV = $-5,743,874
24.When bonds are issued at a premium: A) coupon interest paid decreases each period as bond premium is amortized. B) coupon interest paid increases each period as bond premium is amortized. C) earnings of the firm increase over the life of the bond as the bond premium is amortized. D) earnings of the firm decrease over the life of the bond as the bond premium is amortized. The correct answer was C) As bond premium is amortized, interest expense will be successively lower each period, thus increasing earnings over the life of the bond.
25.An analyst is considering a bond with the following characteristics: §
Face value = $10.0 million §
Annual coupon = 5.6% §
Market yield = 6.5% §
5 year maturity At issuance the bond will: A) increase total assets by $9.626 million. B) increase total liabilities by $10.0 million. C) provide cash flow from investing of approximately $9.626 million. D) result in the creation of an amortization on bond premium account in the amount of approximately $0.374 million. The correct answer was A) First we must determine the present value of the bond. FV = 10,000,000, PMT = 560,000, I/Y = 6.5, N = 5, Compute PV = 9,625,989, or approximately $9.626 million. The entries to record the issue (all in $ million) are: increase (debit) to cash of 9.626, an increase (debit) to unamortized bond discount of 0.374, and an increase (credit) in long-term-debt liability of 10.0. At issuance, the university will receive cash flow from financing of $9.626 million. | 
发表于 2008-4-18 17:29
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