Rana Purchases a 5%,$100,000 Corporate Bond at Issuance on January

question 106

Multiple Choice

Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2015 for $91,500.The bond matures in five years.In 2015 Rana will recognize interest income of

• A)$0.
• B)$5,000.
• C)an amount less than $5,000 (but more than $0).
• D)an amount greater than $5,000.

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Definitions:

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace where individuals pursuing their own interest inadvertently benefit society at large.

Government Policies

Measures and regulations implemented by a government to influence economic, social, or administrative outcomes in the country.

Government Intervention

Actions taken by a government to influence or directly control economic activities, often to correct market failures or promote economic stability.

Promote Efficiency

To enhance the effectiveness and productivity with which resources are used, minimizing waste and maximizing output.