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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![A bond sells at a discount when the:
O Contract rate is above the market rate
Contract rate is equal to the market rate
O Contract rate is below the market rate
O Bond has a short-term life
O Bond pays interest only once a year](https://content.bartleby.com/qna-images/question/1abefffd-5700-49bb-8c5e-9bf0288b70b7/aacba5a6-fcdf-46e1-97f9-6039fc59da3a/jroh5g_thumbnail.jpeg)
Transcribed Image Text:A bond sells at a discount when the:
O Contract rate is above the market rate
Contract rate is equal to the market rate
O Contract rate is below the market rate
O Bond has a short-term life
O Bond pays interest only once a year
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- Bond A makes semi-annual interest payments of $30. Bond B makes an annual payment of $50. All else equal, which one has the lower coupon rate? Select one: a. B b. A=B c. Aarrow_forward13.. The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest: A. Less the present value of all future interest payments at the rate of interest stated on the bond. B. Plus the present value of all future interest payments at the rate of interest stated on the bond. C. Plus the present value of all future interest payments at the market (effective) rate of interest. D. Less the present value of all future interest payments at the market (effective) rate of interest.arrow_forward1. If bonds are sold at a discount and the straight-line method of amortization is used, interest expense in earlier years will: (A) Exceed what is would have been had the effective interest rate method of amortization been used. (B) Be less than what it would have been had the effective interest rate method of amortization been used. (C) Be the same as it would have been had the effective interest rate method of amortization been used. (D) None of the above.arrow_forward
- 19arrow_forwardFor a one year holding period bond with no coupon payments, the interest rate is the same as the YTM which is the same as the return rate- true or falsearrow_forwardIf interest rates rise after a bond issue, what would happen to the bond's price and YTM? Does the time to maturity affect the extend to which interest rates changes affect the bond price? (Please give an example)arrow_forward
- You have purchased a U.S. Treasury bond for $3,150.00. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5,150. What interest rate will you earn on this bond? Group of answer choices 6.18% 5.04% 3.73% 5.67% 4.46%arrow_forwardListen Assume that there is a bond that pays $20.00 at the and of year 2, and $105.00 at the end of year 7. It sells at a total =$(20.00+105.00). The Macauley duration of the bond is? Answer with two digits decimal accuracy. Blank Excel Worksheet Your Answerarrow_forward6. When is interest expense more than interest paid? a. when bonds are sold at a premiumb. when bonds are sold at parc. when bonds are sold at a discountd. when bonds are sold at a yieldarrow_forward
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