A bond is a formal debt instrument that obligates the borrower to repay a stated amount at the maturity date.

A bond is a formal debt instrument that obligates the borrower to repay a stated amount at the maturity date. This stated amount is referred to as the:

A) Note.

B) Interest.

C) Lease.

D) Principal or face amount.

Answer: D

At the beginning of the lease period, the lease is reported in the lessee's balance sheet for which amount?

A) Fair value of the underlying asset.

B) Present value of expected cash inflows from using the underlying asset.

C) Present value of lease payments over the lease period.

D) Leases are not reported in the balance sheet.

Answer: C

A common advantage of obtaining long-term funds by issuing bonds, rather than borrowing from the bank, includes which of the following?

A) Bonds involve less surrendering of ownership control.

B) Bonds usually have a lower interest rate.

C) Bonds are more likely to involve borrowing from a single lender.

D) Bond issue costs are usually lower than fees charged by the bank.

Answer: B