The Effective-Interest Method of Amortization of Bond Premiums and Discounts

question 241

Multiple Choice

The effective-interest method of amortization of bond premiums and discounts is considered superior to the straight-line method because it results in a(n)

• A)interest rate that is close to the market interest rate.
• B)uniform rate of interest.
• C)more variable interest rate.
• D)interest rate that increases or decreases slightly over time.

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Definitions:

Statutorily Recognized

Officially acknowledged or established by law through legislative action.

Confidential Information

Data or knowledge that is not meant to be made available to the public due to its sensitive nature or proprietary value.

Willfully Violates

Intentionally breaching or failing to comply with a legal obligation, rule, or law.

Securities Act of 1933

A U.S. federal law that governs the sale of securities, requiring them to be registered and to disclose relevant financial information to protect investors.