Question : 41. _____bonds permit the holder to exchange the bonds for shares : 1230316

41. _____bonds permit the holder to exchange the bonds for shares of the firm’s common stock under certain conditions.  
A. Derivative
B. Convertible
C. zero coupon
D. Serial
E. Debenture

42. The conversion option of convertible bonds has value because the holder can benefit from some of the later increases in the market value of the firm’s _____ after issuance of the bonds.  
A. preferred stock
B. paid-in-capital
C. treasury stock
D. common stock
E. debentures

43. What determines the risk of investing in a bond issue, which in turn affects the interest rate investors demand and therefore the bond’s price.  
A. industry economic characteristics
B. the financial health of a firm
C. particular provisions of a bond issue
D. all of the above
E. none of the above

44. Notes, bonds, leases and derivatives are _____. 
A. present values of future cash flows
B. financial instruments
C. collateralized debt obligations
D. unsecured debt obligations
E. investment trusts

45. _____ of a note or bond at any date subsequent to the initial borrowing equals the present value of the future, or remaining, cash flows discounted at an appropriate interest rate. 
A. The amount borrowed initially
B. The market value
C. The liquidation value
D. The net realizable value less selling costs
E. choices a and b

46. The amount borrowed initially and the market value of a note or bond at any date subsequent to the initial borrowing equals  
A. the sum of the future cash flows.
B. the present value of the future, or remaining, cash flows discounted at an appropriate interest rate.
C. the future cash flows discounted at the initial market interest rate.
D. the future cash flows discounted at the subsequent market interest rate.
E. the future value of present cash flows discounted at an appropriate interest rate.

47. On the date of initial issuance of a financial instrument , the market value will equal  
A. the initial issue proceeds [the amount borrowed].
B. the sum of the future cash flows.
C. the maturity value of the instrument.
D. the par value of the instrument.
E. the par value of the instrument minus the premium or plus a discount.

48. U.S. GAAP  and IFRS permit firms to account for notes and bonds under which of the following approach(es):  
A. Amortized Cost.
B. Fair Value.
C. Amortized Cost and Future Value.
D. Non-amortized cost and Fair Value.
E. Amortized Cost and Fair Value.

49. The approach which dominates current financial reporting of financial instruments [uses the historical market interest rate to compute the carrying value of notes and bonds while these obligations are outstanding] is the _____ approach. 
A. amortized cost
B. un-amortized cost
C. imputed cost
D. future value
E. liquidation value

50. The FASB and the IASB refer to the approach that uses the current market interest rate instead of the historical market interest rate to discount the remaining cash flows from financial instruments as the 
A. future value option. 
B. current value option. 
C. liquidation value option. 
D. fair value option. 
E. accurate value option.