If the Market Rate of Interest Is 8%, the Price

question 84

Multiple Choice

If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $250,000 will be

• A) Equal to $250,000
• B) Greater than $250,000
• C) Less than $250,000
• D) Greater than or less than $250,000, depending on the maturity date of the bonds

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Unit Selling Price

The amount for which a unit of product is sold, not including any discounts or allowances.

Variable Cost Method

An accounting approach where costs that vary directly with the level of production are allocated to products, influencing the cost of goods sold and inventory valuation.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, indicating the amount contributing towards covering fixed costs and generating profit.