The following are terms or phrases that were introduced in the chapter. 

1. Bond certifi cate. 

2. Premium (on a bond). 

3. Discount (on a bond). 

4. Times interest earned. 

5. Present value. 

6. Maturity date. 

7. Callable bonds. 

8. Market interest rate. 

9. Contingencies. 

10. Secured bonds. 

11. Contractual (stated) interest rate. 

12. Unsecured bonds. 

13. Off -balance-sheet financing. 

14. Face value. 

15. Convertible bonds 

Instructions

Match the term or phrase with the appropriate description below. 

a.__________The value today of an amount to be received at some date in the future after taking into account current interest rates. 

b.__________Bonds that have specifi c assets of the issuer pledged as collateral. 

c.__________Events with uncertain outcomes that may represent potential liabilities. 

d.__________Bonds that can be converted into common stock at the bondholder’s option. 

e.__________A legal document that indicates the name of the issuer, the face value of the bonds, and other data such as the contractual interest rate and the maturity date of the bonds. 

f.__________Bonds that the issuing company can redeem (buy back) at a stated dollar amount prior to maturity. 

g.__________The date on which the fi nal payment on a bond is due from the bond issuer to the investor. 

h.__________Rate used to determine the amount of interest the issuer pays and the investor receives. 

i.__________The difference between the face value of a bond and its selling price when a bond is sold for less than its face value. 

j.__________A measure of a company’s solvency, calculated by dividing the sum of net income, interest expense, and income tax expense by interest expense. 

k.__________The rate investors demand for loaning funds to the corporation. 

l.__________Amount of principal due at the maturity date of the bond. 

m.__________Bonds issued against the general credit of the borrower. 

n.__________The intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its balance sheet 

o.__________The difference between the selling price and the face value of a bond when a bond is sold for more than its face value.