If a Note's Stated Interest Rate Is Equal to the Prevailing

question 26

Multiple Choice

If a note's stated interest rate is equal to the prevailing market rate of interest, which of the following is true?

• A) The note's face value is less than the note's present value.
• B) The note's face value is more than the note's present value.
• C) The note's face value and present value are equal.
• D) There is not enough information provided to make this determination.

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Definitions:

Net Cash

Cash balance post the deducting of cash disbursements from cash receipts.

Investing Activities

Transactions involving the purchase or sale of long-term assets and other investments not included in cash equivalents.

Net Cash

Remaining cash after taking into account the cash received and spent.

Operating Activities

These are day-to-day actions that a company engages in, which are directly related to its primary operations such as sales, provision of services, and production.