A Government Has Elected to Issue New Debt and Use

question 13

Multiple Choice

A government has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so. There is, however, an "accounting loss" associated with these events. The accounting loss is defined as

• A) The present value of the principal and interest payments on the new debt less the present value of the principal and interest payments on the old debt.
• B) The present value of the principal and interest payments on the old debt less the present value of the principal and interest payments on the new debt.
• C) The cash paid to redeem the old debt less the book value of the old debt.
• D) The face value of the new debt less the cash paid to redeem the old debt.

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Definitions:

Deviant Behavior

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Social Definition

The process by which society collectively assigns meanings, categorizations, or values to certain behaviors, concepts, or conditions.

Social Definitions

Social definitions entail the meaning or interpretation of concepts, terms, or phenomena as understood and shared by a society or cultural group.

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