A Bond Is Sold for an Amount Less Than Its

question 42

Multiple Choice

A bond is sold for an amount less than its face value.Which of the following statements would explain why?

• A) The bond's stated rate is lower than the prevailing market rate at time of sale.
• B) The bond's stated rate is the same as the prevailing market rate at time of sale.
• C) The bond's stated rate is higher than the prevailing market rate at time of sale.
• D) The bond is not secured by specific assets of the issuer.

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Definitions:

Disposal

The act of getting rid of an asset through sale, exchange, retirement, or destruction.

Continuing Operations

The segments or activities of a business expected to continue for the foreseeable future, excluding any discontinued operations from financial analysis.

Discontinued Operations

Components of a business that have been sold or terminated, which are reported separately in the financial statements.

Discontinued Operation

A segment of a company's business that has been sold, ceased to operate, or is scheduled for termination.