When the Bonds Are Sold for More Than Their Face

question 126

Multiple Choice

When the bonds are sold for more than their face value, the carrying value of the bonds is equal to

• A) face value
• B) face value plus the unamortized discount
• C) face value minus the unamortized premium
• D) face value plus the unamortized premium

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Definitions:

Carrying Costs

Expenses incurred for holding inventory, including storage, insurance, and handling costs.

Bond Yields

The amount of return an investor realizes on a bond, calculated by dividing annual interest payments by the bond's current market price.

Reorder Points

The inventory level at which an order must be placed to replenish stock before it runs out, ensuring optimal inventory levels.

Inventory Costs

Costs associated with holding and managing inventory, including storage costs, insurance, depreciation, and potential obsolescence, crucial for supply chain and operations management.