Rana Purchases a 5%,$100,000 Corporate Bond at Issuance on January

question 47

Multiple Choice

Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2017 for $91,500.The bond matures in five years.In 2017 Rana will recognize interest income of

• A)$0.
• B)$5,000.
• C)an amount less than $5,000 (but more than $0).
• D)an amount greater than $5,000.

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Definitions:

Inflation

A general increase in prices and a decrease in the purchasing value of money.

South Korean Won

The official currency of South Korea, represented by the symbol ₩ and the ISO code KRW.

Flexible Exchange Rates

A currency system where the value of a country's currency is allowed to fluctuate according to the foreign exchange market forces of demand and supply.

Market for Yen

The foreign exchange market where the Japanese yen is traded, including the buying, selling, and speculating on yen.