When the Market Rate of Interest on Bonds Is Equal

question 13

Multiple Choice

When the market rate of interest on bonds is equal to the contract rate, the bonds will sell at:

• A) a premium.
• B) their face value.
• C) a discount.
• D) a discount or a premium.

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Definitions:

State Unemployment Taxes

Taxes imposed by state governments on employers to fund unemployment insurance benefits for laid-off workers.

Hourly Wage Rate

The amount of money paid for each hour of work performed.

Federal Income Tax Withholding

Federal income tax withholding is the process by which an employer deducts a portion of an employee's income to pay directly to the federal government as a prepaid credit towards the employee’s annual tax liability.

Contingent Liabilities

Potential obligations that may arise from past events, depending on the outcome of future events.