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a 5-year term bond was issued on January 1, year 1, at a discount. the carrying amount of the bond on December 31, year 2, will be higher than the carrying amount on December 31, 2017.
Bonds
Bonds are high-security debt products that allow a company to raise cash and meet capital needs. It is a type of debt that debtors obtain from individual investors for a certain period of time. Companies, governments, municipalities, and other entities issue bonds for investors in primary markets. Bonds are graded by well-known organizations such as Standard and Poor's and Moody's. Each agency's rating system is slightly different, however the highest grade is AAA and the lowest rating is C or D, depending on the agency. Bonds are typically priced at a face value (also known as par) of $1,000 per bond, but once the bond enters the open market, the asking price might be lower than the face value, known as a discount, or more than the face value, known as a premium.
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