Bay Company Acquires 60, 8%, 5 Year, $1,000 Community Bonds

question 24

Multiple Choice

Bay Company acquires 60, 8%, 5 year, $1,000 Community bonds on January 1, 2014 for $60,000. If Bay sells all of its Community bonds for $64,500, what gain or loss is recognized?

• A)Loss of $9,300
• B)Loss of $4,500
• C)Gain of $9,300
• D)Gain of $4,500

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Definitions:

Bowed Outward

A description of a production possibility frontier that displays increasing opportunity costs as more of one good is produced.

Specialized Resources

Inputs in the production process that have specific uses and are not easily adaptable to other types of production.

Comparative Advantage

The capacity of a person, business, or nation to create a product or offer a service with a smaller opportunity cost compared to its rivals.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.