If Bonds Have Been Issued at a Discount, Then Over

question 150

Multiple Choice

If bonds have been issued at a discount, then over the life of the bonds the

• A)carrying value of the bonds will decrease.
• B)carrying value of the bonds will increase.
• C)interest expense will increase if the discount is being amortized on a straight-line basis.
• D)unamortized discount will increase.

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Definitions:

U.S. Dollar

The official currency of the United States, widely used as a benchmark in global financial transactions.

Appreciates

Refers to an increase in value or price of an asset, currency, or commodity over time.

Purchasing Power Parity

A theory that states prices of goods and services should equalize across countries when expressed in a common currency, meaning a basket of goods should cost the same regardless of the country after accounting for exchange rates.

Big Mac

a hamburger sold by the international fast-food chain McDonald's, often used as a symbol of globalization and sometimes as a reference point in economic studies like the Big Mac Index.