Question: 1. Why does a company that issues bonds between interest dates collect accrued interest from the bonds' purchasers?
2. If you know the par value of bonds, the contract rate, and the market rate, how do you compute the bonds' price?
3. What is the issue price of a $2,000 bond sold at 98¼? What is the issue price of a $6,000 bond sold at 101½?
4. Describe the debt-to-equity ratio and explain how creditors and owners would use this ratio to evaluate a company's risk.