Using the Effective Interest Rate Method to Amortize Bond Premium

question 37

Multiple Choice

Using the effective interest rate method to amortize bond premium will

• A) cause the carrying value of the bond to increase as it approaches the maturity date.
• B) cause the carrying value of the bond to decrease as it approaches the maturity date.
• C) cause the carrying value to be the same as the issue price.
• D) not change the carrying value.

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Definitions:

Competition

The rivalry among businesses or individuals for resources, clients, or market share.

Farsightedness

The ability to understand the long-range implications of actions and policies.

Technological Developments

Refers to advancements and innovations in technology that improve processes, products, or services.

Environmental Forces

External parameters that influence how an organization operates, including economic, political, regulatory, technological, and social factors.