A Corporate Bond with a Face Value of $1,000 Is

question 43

Multiple Choice

A corporate bond with a face value of $1,000 is issued at 107.This means that the bond actually sold for:

• A)$107 and the stated interest rate was higher than the market interest rate.
• B)$1,070 and the stated interest rate was higher than the market interest rate.
• C)$107 and the stated interest rate was lower than the market interest rate.
• D)$1,070 and the stated interest rate was lower than the market interest rate.

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Definitions:

Cost of Goods Sold

The total cost of all raw materials, labor, and overhead expenses incurred to produced goods that were sold during a particular period.

Perpetual Inventory System

An accounting method that continuously updates inventory records for purchases and sales in real-time.

Periodic System

The periodic system is an inventory accounting system where updates to inventory levels are made on a periodic basis, such as monthly or yearly, rather than continuously updating with each sale or purchase.

Average Cost Method

An inventory costing method in which all goods are assigned a price based on the average cost of all units purchased, factoring in all inventory acquired.