Question

Choose the appropriate letter to match the term and the definition. Not all definitions will be used.

Term

1. _____ Accrued liability

2. _____ Loan covenant

3. _____ Issue price

4. _____ Face value

5. _____ Line of credit

6. _____ Public debt offering

7. _____ Security

8. _____ Contingent liability

9. _____ Debt-to-assets ratio

Definition

A. Bond features that allow the issuer to repay the loan early.

B. A prearranged agreement that allows a company to borrow at will up to a limit.

C. This item is reported as a contra asset account.

D. The amount that the lender actually pays for a bond.

E. The cost of issuing a bond.

F. Debt features that, if violated, allow the lender to revise loan terms.

G. The total amount of money that a company owes in debt.

H. The amount a company must repay creditors when a bond matures.

I. These are liabilities that have been incurred during the period but not yet paid.

J. When a company borrows money by issuing bonds in the financial markets.

K. A bond feature that allows a creditor to seize assets if debt is not properly repaid.

L. This type of liability is uncertain; it exists only if some other condition occurs.

M. Total liabilities divided by total assets.

Answer

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