Which of the Following Statements Is Correct

question 76

Multiple Choice

Which of the following statements is correct?

• A)If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the issuer will purchase bonds in the financial markets because their prices will be less than the par value.
• B)If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond's maturity value would be more than its par value.
• C)If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond will mature in 15 years and not in 10 years.
• D)If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond will sell at a premium.
• E)If a 10-year, $1,000 par value bond is issued at a coupon rate of 10 percent and if its market yield is 5 percent, the bond's coupon rate would decrease from 10 percent to 5 percent.

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Definitions:

Post-Closing Trial Balance

A list of all accounts still open after closing entries are made, used to ensure that debits equal credits.

Capital

The wealth in the form of money or other assets owned by a person or organization, or available for a purpose such as starting a company or investing.

Purchases

The total cost of goods acquired by a company for resale or use in production during an accounting period.

Freight-In Account

An accounting term for the cost of transporting goods into a business, which is part of the cost of goods sold.