Bonds with a Face Value of $200,000 Were Sold at an Effective

question 75

Multiple Choice

Bonds with a face value of $200,000 were sold at an effective interest rate of 8% to yield cash proceeds in excess of $200,000.It is apparent that the bonds had a:

• A)stated interest rate less than 8%.
• B)stated interest rate greater than 8%.
• C)effective interest rate less than 8%.
• D)effective interest rate greater than 8%.

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Definitions:

Damages

Monetary compensation that a party is ordered to pay to another for harm or injury.

Negotiable Instrument

A written promise to pay a specified sum of money, payable either on demand or at a specific future date, with the document listing the name of the person who will make the payment.

Unconditional Promise

A commitment or guarantee without any stipulations or requirements that the promisor must fulfill.

Agreement

A mutual understanding or arrangement between two or more parties, often formalized by a contract.