A Bond Premium

question 105

Multiple Choice

A bond premium:

• A) arises when interest payments are higher than the cost of borrowing.
• B) essentially free money.
• C) arises when the interest payments are less than the cost of borrowing.
• D) is reported on the income statement as a gain on the issuance of a bond.

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Definitions:

Extension

The movement by which the angle between two adjoining parts of the body is increased; opposite of flexion.

Hyperesthesia

An increased sensitivity to stimulation, particularly touch.

Summation Effect

The process where combined effects of multiple stimuli result in a greater response than the sum of their individual effects.

Analgesia

The absence of pain in response to stimulation which would normally be painful, often achieved through the use of medication.