Which of the Following Amounts Is Closest to the Value

question 55

Multiple Choice

Which of the following amounts is closest to the value of a bond that pays $55 semiannually and has an effective semiannual interest rate of 5%? The face value is $1,000 and the bond matures in 3 years. There are exactly six months before the first interest payment.

• A) $1,014.
• B) $1,055.
• C) $888.
• D) $1,025.
• E) $1,000.

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Definitions:

General Journal Entry

A general journal entry is a record of financial transactions that includes details such as date, accounts impacted, amounts, and a brief description of the transaction.

Petty Cash Fund

A petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check or using a credit card.

Reimburse

To pay back or compensate someone for expenses they have incurred, typically related to business costs or travel expenses.

Voucher System

A business's set of procedures for authorizing and recording liabilities and cash disbursements.