Bond, James Bond

Already to the third chapter in the semester. That means it's test time. The first test is scheduled for next Thursday. We spent some of the time discussing bonds, interest rates, buying and selling at a different rate than the market rate.

Hopefully I said everything correctly last night. I always get going a hundred miles a minute and say things confusingly. I'd like to pretend I do it on purpose just to make sure everyone is awake but don't know if I can honestly feel good about the deception.

The main points in the chapter revolve around a company that is issuing bonds. So put yourself in the issuing company shoes. Not the one buying bonds. If you issue at a discount that means you don't receive as much money as you will owe when the bond matures. Thus it increases interest expense over the life of the bond. If you issue at a premium you get more money than what you owe at maturity date. Thus decreasing overall interest expense. In all reality, The interest rate you pay overall is pretty well the market rate when the bonds are issued. Hopefully the homework solidifies the concepts.

My favorite quote on interest:

“Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours. … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”
- J. Reuben Clark

Glad there were several people asking questions. I'm sure everyone had the same questions. It's helpful to the class as a whole. Didn't see Debye in class. Anyone know her status? Tammy's been quiet this semester. Must still have a sore head from her fall. Tune must follow current events as he knew about Icelands banking fiasco. Another link. Josh says his pathology class rocks. I sure everyone says the same about accounting. Mary-Liz decided she'd create a work of art by doing a combined journal entry with interest expense for discounts/premiums. That's what I'm talking about. Fun stuff.

I'll have to do another blog to talk about Nikki's article from WSJ. Probably do that on Monday.

Homework:

•P15-31A
•P15-32A
•P15-33A
•P15-38B
•P15-39B
•P15-40B