Which Is the Preferred Method to Use When Amortizing a Bond

question 10

Multiple Choice

Which is the preferred method to use when amortizing a bond discount or premium?

• A)Market-interest rate method of amortization
• B)Straight-line method of amortization
• C)Effective-interest method of amortization
• D)Both straight-line and market-interest rate methods of amortization are equally preferred.

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Definitions:

Residual

The difference between an observed value and the estimated value provided by a model.

Actual Value Of Y

The observed or measured outcome in a statistical analysis or experiment, representing a specific data point on the Y-axis.

Estimated Value Of Y

A predicted value of the dependent variable in a regression analysis based on specific values of the independent variables.

Dependent Variable

The variable in an experiment or study that is affected or influenced by changes in another variable, often measured or tested.