Amortized Discount Is Computed Annually When a Bond Is Issued

question 181

Multiple Choice

Amortized discount is computed annually when a bond is issued for other than its face value.For a bond issued at a discount, how will this component change as the bond approaches maturity?

• A) decrease
• B) increase
• C) remain constant
• D) not enough information given to decide

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Definitions:

Nominal Variables

Categorical variables that represent different categories or types which do not have a natural order or ranking among them.

Relationship

The method of connection between two or more concepts, objects, or individuals, or the existence of such a connection.

Degrees Of Freedom

The count of distinct values or measures that can be attributed to a statistical distribution while adhering to all restrictions.

Parameters Estimated

Quantitative values derived from statistical modeling used to represent characteristics of a population based on sample data.