The Annual Interest Payment on Bonds

question 40

Multiple Choice

The annual interest payment on bonds:

• A)increases over the life of the bonds when bonds are issued at a discount.
• B)decreases over the life of the bonds when bonds are issued at a discount.
• C)stays constant over the life of the bonds,regardless of whether bonds are issued at par,a discount,or a premium.
• D)increases over the life of the bonds under the effective-interest method,but stays constant under the straight-line method of amortization.

---

Definitions:

Stockholder

An individual or entity that owns shares in a corporation, thus having a claim on its profits and assets.

Transfer

The act of moving money or goods from one place, account, or person to another.

Classified by Purpose

A method of grouping or categorizing items according to their intended use or role within a system or process.

Profit

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.