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Match these terms with their definitions.

a. The rate that reflects the provisions of the debt instrument, the credit standing of the borrowing business, and the current conditions in the credit markets and the economy as a whole.
b. The rate found in the debt contract that determines the amount of the interest payment.
c. Occurs when a bondâs issue price exceeds its face value.
d. The amount that must be repaid at maturity.
e. A type of liability which requires the issuing entity to pay the face value to the holder on the maturity date and to pay interest periodically at a specified rate.
f. Occurs when a bond is issued for an amount that is less than the principal.
g. Term referring to the date that a bondâs principal has to be repaid.

1. Bond.
2. Contract, coupon, stated rate.
3. Discount.
4. Face value, par value, principal.
5. Market rate, yield.
6. Maturity.
7. Premium.

Sagot :

Answer and Explanation:

The matching is as follows

a. 5. Market rate, yield. as it represent the debt instrument provisions, credit standing, and the present conditions

b. 2. Contract, coupon, stated rate, this represent that rate that could be find in the contract of the debt that measures the interest payment amount

c. 7. Premium. this is the case when the issue price of the bond is more than the face value

d. 4. Face value, par value, principal. It is the amount that should be repay at the maturity

e. 1. Bond. It is the liability that needs the entity to pay off the face value on the maturity date

f. 3. Discount. It arise when the issue price of the bond is lower than the principal

g. 6. Maturity. it refers to the date when the principal of the bond is repaid  

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