A Company Issues Bonds at Par on April 1

question 167

Multiple Choice

A company issues bonds at par on April 1.These 9% bonds have a par value of $100,000 and pay interest annually.April 1 is four months after the most recent interest payment date.How much total cash interest is received on April 1 by the bond issuer?

• A)$750
• B)$5,250
• C)$1,500
• D)$3,000
• E)$6,000

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Definitions:

Negligence

The failure to take appropriate care in doing something, leading to damage or harm to someone else.

Holder

The individual or entity that possesses or controls a particular document, instrument, or security, having certain rights to it.

Drawee

A party upon whom a cheque or draft is drawn, typically a bank, responsible for paying the amount specified to the payee.

Negotiable Instruments

Financial documents promising payment to the holder, such as checks, bills of exchange, and promissory notes.