Accounting 102 Discussion Questions

Instructions 1. Describe the two distinct obligations incurred by a corporation when issuing bonds? 2. Explain the meaning of each of the following terms as they relate to a bond issue: (a) convertible (b) callable (c) debenture. 3. If you asked your broker to purchase for you a 7% bond when the market interest rate for such bonds was 8%, would you expect to pay more or less than the face value for the bond? Explain. 4. Would a zero coupon bond ever sell for its face amount? (think about this last one...it involves a little thought!)