Accounting 302 Online Quizzes

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| By Mdb414
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Quizzes Created: 2 | Total Attempts: 1,183
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  • 1/6 Questions

    What is common stock?

    • A residual corporate interest
    • Bears the ultimate risk of loss and receives the benefits of success
    • Generally control the management
    • Tend to profit most if the company is successful
    • All of the above
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About This Quiz

Dive into the complexities of bond contracts, interest rates, and stock types with the Accounting 302 Online Quizzes. This quiz assesses understanding of key financial instruments and their implications, essential for advanced accounting and finance studies.

Accounting 302 Online Quizzes - Quiz

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  • 2. 

    What do preferred stock holders sacrifice?

    • A right to share in profits beyond the stated rate

    • Preemptive right

    • A right to a voice in management

    • A & C

    Correct Answer
    A. A & C
    Explanation
    Preferred stock holders sacrifice the right to share in profits beyond the stated rate and the right to a voice in management. This means that while they may receive a fixed dividend or interest payment, they do not have the opportunity to participate in any additional profits that the company may generate. Additionally, they do not have the ability to influence or participate in the decision-making process of the company.

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  • 3. 

    How is the effective rate of interest calculated?

    • Multiply the carrying value of the bonds at the beginning of the period by the effective interest rate.

    • Multiply the face value of the bonds by the effective interest rate.

    Correct Answer
    A. Multiply the carrying value of the bonds at the beginning of the period by the effective interest rate.
    Explanation
    The effective rate of interest is calculated by multiplying the carrying value of the bonds at the beginning of the period by the effective interest rate. This method takes into account both the principal amount and any interest accrued on the bonds, providing a more accurate measure of the true interest rate.

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  • 4. 

    What is the actual interest a bondholder receives?

    • Stated rate of interest

    • Interest yield

    • Effective yield

    Correct Answer
    A. Effective yield
    Explanation
    The actual interest a bondholder receives is the effective yield. The effective yield takes into account not only the stated rate of interest but also any additional factors such as compounding, fees, and other costs associated with holding the bond. It provides a more accurate representation of the true return on investment for the bondholder.

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  • 5. 

    What is the contract that gives rise to a bond?

    • Bond debenture

    • Bond Indenture

    Correct Answer
    A. Bond Indenture
    Explanation
    A bond indenture is a legal contract that outlines the terms and conditions of a bond. It includes important details such as the interest rate, maturity date, payment schedule, and any collateral or security provided for the bond. The bond indenture also specifies the rights and obligations of both the issuer and the bondholder. This contract is essential as it establishes the legal relationship between the parties involved and ensures that both parties adhere to the agreed-upon terms throughout the life of the bond.

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  • 6. 

    The interest rate written in terms of the bond indenture is known as the?

    • Stated rate

    • Coupon rate

    • Nominal rate

    • Stated, coupon, or nominal rate

    Correct Answer
    A. Stated, coupon, or nominal rate
    Explanation
    The interest rate written in terms of the bond indenture is commonly referred to as the stated rate, coupon rate, or nominal rate. These terms are used interchangeably to represent the fixed rate of interest that the bond issuer promises to pay to bondholders over the life of the bond. This rate is specified in the bond indenture, which is a legal document outlining the terms and conditions of the bond.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 03, 2010
    Quiz Created by
    Mdb414
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