You Graphed the Carrying Value and Par Value Over the Life

question 74

Multiple Choice

You graphed the carrying value and par value over the life of a bond. You noticed that the carrying value is above the par value line and that the two lines meet over time.Identify the statement below that is best described by the graph you drew.

• A) The bond was issued at a premium.
• B) The bond was issued at par.
• C) Effective interest amortization is used.
• D) The bond was issued at a discount.
• E) Discounted interest amortization is used.

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Definitions:

Classical Economists

A group of economists in the 18th and 19th centuries who believed in free markets, the self-regulating nature of economies, and the importance of competition.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of money.

Keynes

Refers to John Maynard Keynes, a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Wages

Payments made to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.