Which of the Following Statements Is TRUE If a Bond

question 161

Multiple Choice

Which of the following statements is TRUE if a bond is issued for an amount equal to its face value?

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

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Definitions:

Book Value

The net value of an asset or company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Accumulated Depreciation

The total amount of depreciation expense that has been charged to a fixed asset since it was in service, reducing its book value.

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting the loss of value over time.

Fair Market Value

The price at which an asset would sell in the marketplace, assuming both buyer and seller are knowledgeable, willing, and under no pressure to buy or sell.