Notes and Bonds Are Long-Term Debt Instruments

question 248

Multiple Choice

Notes and bonds are long-term debt instruments. Long-term debt instruments are sold at ______________ when the market rate _____________ the stated interest rate.

• A) Discount, exceeds
• B) Premium, exceeds
• C) Discount, less than
• D) Premium, less than

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Definitions:

Accounting Profits

The financial gains of a company calculated by subtracting total expenses from total revenues according to standard accounting practices.

Economic Profits

The financial difference between what a business earns in total revenue and what it spends, considering both explicit and indirect costs.

Implicit Costs

The opportunity costs involved in using resources that a firm already owns, for which it does not make a direct payment.

Accounting Profits

The total revenue of a business minus the explicit costs associated with producing goods or services, not accounting for implicit costs.