A Company Reported That Its Bonds with a Face Value

question 12

Multiple Choice

A company reported that its bonds with a face value of $50,000 and a carrying value of $53,000 are retired for $56,000 cash.The amount to be reported under cash flows from financing activities is:

• A)($53,000).
• B)($3,000).
• C)($56,000)
• D)$0.This is an operating activity.

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Definitions:

Efficient Markets Hypothesis

A financial theory stating that asset prices fully reflect all available information.

Overvalued

A term used to describe a situation in which a security or asset is trading at a price that exceeds its intrinsic value.

Undervalued

A description of an asset or currency whose price is believed to be lower than its intrinsic value.

Mutual Fund Managers

Professionals responsible for managing the investment portfolio of a mutual fund, making decisions about which securities to buy, hold, or sell.