When the Straight-Line Method of Amortization Is Used for a Bond

question 19

Multiple Choice

When the straight-line method of amortization is used for a bond premium, the amount of interest expense for an interest period is calculated by

• A)adding the amount of premium amortized for that period to the amount of cash paid for interest during the period.
• B)subtracting the amount of premium amortized for that period from the amount of cash paid for interest during the period.
• C)multiplying the face value of the bonds by the stated interest rate.
• D)multiplying the face value of the bonds by the market interest rate.

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Definitions:

P(A|B)

The probability of event A occurring given that event B has already occurred.

Probability

A quantification of the probability that an event will happen, represented as a numerical value ranging from 0 to 1.

Subscriber Owns

Refers to the assets or services a subscriber has purchased and currently possesses.

Probability

A measure of the likelihood or chance of an event occurring; a value between 0 and 1.