Determine the Interest Payment for the Following Three Bonds: 2

question 2

Multiple Choice

Determine the interest payment for the following three bonds: 2.5 percent coupon corporate bond (paid semiannually) , 3.15 percent coupon Treasury note, and a corporate zero-coupon bond maturing in 10 years. (Assume a $1,000 par value.)

• A)$2.50, $3.15, $0, respectively
• B)$12.50, $15.75, $0, respectively
• C)$12.50, $15.75, $100, respectively
• D)$25.00, $31.50, $0, respectively

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Definitions:

Permanent/Temporary

Describes assets or accounts within financial contexts; permanent assets or accounts are long-term and not expected to be converted into cash within a year, while temporary accounts track revenues, expenses, and dividends and are closed at the end of the fiscal year.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodical basis rather than transaction by transaction.

Net Method

An accounting practice where purchase discounts are recorded immediately by reducing the price of the goods bought, assuming the discount will be taken.

Journal Entries

The records of financial transactions in the accounting system, documented in chronological order.