The Cases Company Issues $800,000 of 7%,10-Year Bonds on March

question 108

Multiple Choice

The Cases Company issues $800,000 of 7%,10-year bonds on March 31,2013.The bond pays interest on March 31 and September 30.Which of the following statements is TRUE?

• A) If the market rate of interest is 8%, the bonds will issue at a premium.
• B) If the market rate of interest is 8%, the bonds will issue at a discount.
• C) If the market rate of interest is 8%, the bonds will issue at par.
• D) If the market rate of interest is 8%, the bonds will issue above par.

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Definitions:

Punishment

A process by which a consequence immediately follows a behavior, decreasing the likelihood of that behavior's recurrence.

Robert Rescorla

An American psychologist known for his work with Allan Wagner on the Rescorla-Wagner theory of conditioning, which emphasizes the role of cognition in classical conditioning.

Punishment of Application

The imposition of a penalty or negative consequence following an undesired behavior to decrease its likelihood in the future.

Punishment by Removal

A behavioral modification technique involving the withdrawal of a desirable stimulus to decrease the likelihood of a behavior reoccurring.