Question: Distinguish between the contract rate of interest on a bond
Distinguish between the contract rate of interest on a bond and the yield (or effective rate).
Answer to relevant QuestionsDiscuss how bond prices are determined and how these prices are affected by changes in market interest rates. Deleau Equipment Ltd. issued 10%, five-year bonds with a face value of $80 million on October 1, 2016. The bonds were issued at par and pay interest on March 31 and September 30 each year. Deleau’s year end is December ...a. Describe the three main types of pension plans. b. As a manager, which type of plan would you recommend to the company’s senior executives? Explain. c. As an employee, which plan would you prefer? Explain. Suppose you are considering investing in a particular bond. In assessing the riskiness of the bond, discuss the importance of being aware of the seniority of various company liabilities. Bombardier Inc. is a Canadian manufacturer of aircraft and rail transportation equipment and systems. Exhibit 10-19 contains an excerpt from Note 39 of the company’s 2013 annual report detailing Bombardier’s ...
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