If the Dollar Price of a Bond Is $4,000 and Its

question 128

Multiple Choice

If the dollar price of a bond is $4,000 and its face value is $4,250,the interest rate is equal to

• A) 5.9 percent.
• B) 5 percent.
• C) 6.67 percent.
• D) 6.25 percent.
• E) 10 percent.

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Definitions:

Reasonable Degree

A reasonable degree refers to an acceptable level of certainty or accuracy, often used to describe the precision expected in estimates or judgments.

Revenue Recognition

Accounting principle that outlines the specific conditions under which revenue is recognized and dictates how to account for it on the financial statements.

Substantially Completes

A phrase indicating that a project or task is nearly finished or that a significant portion of the work has been accomplished.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out.