1. Although one can readily determine the present value factors for a lump sum via tables or computers, a equally simple method is to just divide "1" by ____________"1 + i" raised to the "nth" power , where "n" is the number of periods and "i" is the interest rate per period.

 

2. ____________Future value is the amount to which an outlay will grow by the end of a designated time period, while ____________present value is the inverse or reciprocal technique.

 

3. An ____________annuity is a series of equal cash flows.

 

4. The provisions of a bond issue are normally stipulated in an accompanying document called a ____________bond indenture.

 

5. In contrast to secured bonds, ____________debenture bonds have no assets pledged as security.

 

6. ____________Callable bonds permit the issuer to repay bondholders prior to the stipulated maturity date.

 

7. A fund that is set aside to provide for the eventual repayment of bonds at maturity is known as a ____________bond sinking fund.

 

8. The set amount to be repaid on a bond's maturity date is known as ____________face value, whereas, the bond payable amount less any unamortized discount or plus any unamortized premium is known as ____________carrying value.

 

9. The interest rate printed on the face of a bond certificate is called the ____________contract interest rate, whereas the actual interest rate is the ____________effective interest rate.

 

10. When bonds are sold at more than face value, the difference between the issue price and the face value is commonly referred to as a ____________premium.

 

11. Under ____________straight-line amortization, an equal amount of discount is allocated to each interest period, whereas, under the ____________effective interest method of amortization, interest expense is calculated as a constant percentage of the bond carrying value.

 

12. Premium amortization causes interest expense to ____________decrease.

 

13. Ratio analysis of indebtedness provides clues about the financial strength of an entity, but the user of the financial statements should look to the notes to determine additional information about other ____________commitments (alternative financing) and ____________interest rates on debt.

 

14. If a bond is retired early, a gain will result if the retirement price is ____________below the ____________net carrying value of the bond.

 

15. For bonds issued between interest dates, the issuer will receive accrued interest on the ____________issue date, and repay this interest on the next ____________payment date.