Recently, Chrysler Bonds with a Face Value of 100 Closed

question 6

Multiple Choice

Recently, Chrysler bonds with a face value of 100 closed at 103.The coupon rate was 12.75.The current yield on these bonds was

• A)103 percent.
• B)3 percent.
• C)12.75 percent.
• D)less than 12.75 percent.

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Definitions:

Dishonored Note

A promissory note that has not been paid by the issuer at the time of its due date.

Fully Paid

Fully Paid denotes a status where all required payments for a service or product have been completed, with no outstanding amounts due.

Allowance Account

An accounting provision used to create a reserve for accounts receivable that may not be collected in full.

Doubtful Accounts

Accounts receivable that a company believes might become uncollectible in the future, leading to potential losses.