The Price of a Bond Having No Expiration Date Is

question 123

Multiple Choice

The price of a bond having no expiration date is originally $8,000 and has a fixed annual interest payment of $800.A fall in the price of the bond by $3,000 will provide a new buyer of the bond an interest rate of:

• A) 10 percent.
• B) 12 percent.
• C) 14 percent.
• D) 16 percent.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against an asset since it was acquired, up to a specific date.

Expense Recognition

The accounting principle of matching expenses with revenues in the period in which they are incurred to generate those revenues, ensuring accurate financial reporting.

Insurance Premium

The amount paid periodically to an insurer by the insured for covering their risk.

Insurance Expense

The cost recognized in accounting for premiums paid on insurance policies, which protect the company's assets or activities.