Simply Purchases a $200,000 Face Value Bond Which Matures in Two

question 133

Multiple Choice

Simply purchases a $200,000 face value bond which matures in two years. The coupon rate is 6% and the market rate is 5%. How much premium or discount will be amortized in the first year, if any?

• A)$1,814.05
• B)$3,718.92
• C)$10,000.00
• D)$12,000.00

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Definitions:

Vocational School

An educational institution that provides practical and skills-based training for specific careers or trades.

Budgets

Financial plans outlining expected revenues and expenditures for a specific period.

Activity Variances

Differences between planned activity costs and the actual costs incurred for those activities.

Cost Drivers

Factors that cause the cost of an activity or operation to increase or decrease, such as machine hours, labor hours, or the volume of production.