On January 1, MAX Issued Ten-Year Bonds with a Face

question 34

Multiple Choice

On January 1, MAX issued ten-year bonds with a face amount of $1,000,000 and a stated interest rate of 8 percent payable annually each January 1. The bonds were priced to yield 10 percent. The total issue price (rounded) of the bonds was

• A) $1,000,000.
• B) $980,000.
• C) $920,000.
• D) $880,000.

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Definitions:

Declaration Date

The date on which a firm’s board of directors declares a dividend.

Earnings Per Share

A company's net profit divided by the number of its shares outstanding, indicating the amount of earnings attributable to each share of stock.

Payment Date

The date on which a dividend check is mailed.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.