A Company Issued Bonds When the Stated Rate of Interest

question 94

Multiple Choice

A company issued bonds when the stated rate of interest was 10% and the market rate was 8%.Which of the following statements is incorrect?

• A)The bonds were issued at a premium.
• B)Annual interest expense will be less than the company's annual cash payments for interest.
• C)The book value of the bonds will decrease as the bond matures.
• D)The annual interest expense will increase if the effective-interest method of amortization was used.

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Definitions:

Hewlett-Packard

A global information technology company known for its wide range of hardware and software products.

Virtual Company

A business model that operates on digital platforms without a physical presence, often relying on digital communication and distribution channels.

Total Control

An approach or system designed to ensure that every aspect of a process, project, or operation is managed and regulated to achieve desired outcomes with minimal deviations or errors.

Low Capital Investment

Refers to businesses or projects that require a minimal initial financial outlay to start and run.