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anigoOk, Easter Break is upon us. Ok, it's not, but there are no classes this weekend therefore I have two weeks to get caught up on accounting.
I'm starting from square one and going over it with a fine tooth comb and, if I do say so myself, whomever wrote this accounting book was not exactly somebody who knew how to write accounting books.
Market interest rates vs. contracted interest rates.
Let's assume that a bond is contracted at 5% interest. The current market rate is 6%. The bond will be selling at a discount.
WHY!?!?!
I can see that the bond will be needed to sell for less so that at the maturity date the 6% bond and the 5% bond all equal the same amount, but the text says... "But investors cannot change the contractual interest rate, what they can do is pay less than the face value for the bonds..."
Who's getting 6%? And why? Joe company is issuing $100 bonds with a 5% interest rate, and Joe Consumer has purchased this bond at a market rate of 6% - who is giving Joe Consumer 6%? Is it Joe Bookie who works out of the pawn shop downtown? How does he know he's going to get 6%? Where is it written down that he'll get an extra percentage point of interest? Does Joe Company know this? And if so, doesn't it tick them off?
Please, if you have ANY idea of what I'm talking about and feel like trying to explain it to me, break it down into tiny little pictures. My brain works in mental images and I need to actually picture Joe Company giving Joe Investor bonds with "6%" written in big letters on it, and then Joe Investor getting $106 at the end of a year.
Did i mention I can still name all the parts of a cell?
The mitochondira: the power house of the cell.. the cell membrane: a semi-permiable membrane surrounding the cell which allows certain things to pass through... (See, I can PICTURE the little mitochondria working away like a blast furnace, all kinds of little squidgy things inside stoking the thing with fuel, all sweaty and stuff.... I can't picture a premium on a bond due to a fluctuation in market value vs. contracted value. Seriously. WTF!?!?)
If you can help me I can guarantee that the market value of my gratitude will far outweigh any contracted value that might be associated with it.
And another thing. Why does a cut tag require a hyphen between the "LJ" part and the "cut" part. None of the other cut tags requrie a hyphen. What makes it so special.
On to another thought. I was making the Kid's lunch, kvetching to myself about her teacher when I thought: Jeeze, I wonder if she's got a blog somewhere and she's kvetching about me. Ok, probably not, she doesn't strike me as the bloggy type, but taking that out to another degree of separation from Keven Bacon, I wonder if there's somebody out there who blogged tonight that they're damned tired of that girl in the blue Mazda (despite how cute she is) waving her arms like a lunatic every time they stop for traffic on Agricola St.
Makes me feel all nekked and exposed, dontchaknow.
Tub time. Ta ta.
I'm starting from square one and going over it with a fine tooth comb and, if I do say so myself, whomever wrote this accounting book was not exactly somebody who knew how to write accounting books.
Market interest rates vs. contracted interest rates.
Let's assume that a bond is contracted at 5% interest. The current market rate is 6%. The bond will be selling at a discount.
WHY!?!?!
I can see that the bond will be needed to sell for less so that at the maturity date the 6% bond and the 5% bond all equal the same amount, but the text says... "But investors cannot change the contractual interest rate, what they can do is pay less than the face value for the bonds..."
Who's getting 6%? And why? Joe company is issuing $100 bonds with a 5% interest rate, and Joe Consumer has purchased this bond at a market rate of 6% - who is giving Joe Consumer 6%? Is it Joe Bookie who works out of the pawn shop downtown? How does he know he's going to get 6%? Where is it written down that he'll get an extra percentage point of interest? Does Joe Company know this? And if so, doesn't it tick them off?
Please, if you have ANY idea of what I'm talking about and feel like trying to explain it to me, break it down into tiny little pictures. My brain works in mental images and I need to actually picture Joe Company giving Joe Investor bonds with "6%" written in big letters on it, and then Joe Investor getting $106 at the end of a year.
Did i mention I can still name all the parts of a cell?
The mitochondira: the power house of the cell.. the cell membrane: a semi-permiable membrane surrounding the cell which allows certain things to pass through... (See, I can PICTURE the little mitochondria working away like a blast furnace, all kinds of little squidgy things inside stoking the thing with fuel, all sweaty and stuff.... I can't picture a premium on a bond due to a fluctuation in market value vs. contracted value. Seriously. WTF!?!?)
If you can help me I can guarantee that the market value of my gratitude will far outweigh any contracted value that might be associated with it.
And another thing. Why does a cut tag require a hyphen between the "LJ" part and the "cut" part. None of the other cut tags requrie a hyphen. What makes it so special.
On to another thought. I was making the Kid's lunch, kvetching to myself about her teacher when I thought: Jeeze, I wonder if she's got a blog somewhere and she's kvetching about me. Ok, probably not, she doesn't strike me as the bloggy type, but taking that out to another degree of separation from Keven Bacon, I wonder if there's somebody out there who blogged tonight that they're damned tired of that girl in the blue Mazda (despite how cute she is) waving her arms like a lunatic every time they stop for traffic on Agricola St.
Makes me feel all nekked and exposed, dontchaknow.
Tub time. Ta ta.