The Effective Interest Method of Amortization of Bond Premiums and Discounts

question 31

Multiple Choice

The effective interest method of amortization of bond premiums and discounts is superior to the straight-line method because it results in a(n)

• A)more variable interest rate.
• B)uniform rate of interest.
• C)interest rate that increases or decreases slightly over time.
• D)interest rate that is close to the market interest rate.

---

Definitions:

Adequacy of Explanation

Refers to the extent to which an explanation sufficiently accounts for the evidence or reasons given, often evaluated in terms of completeness and clarity.

Framing

The way information is presented or phrased, which can significantly affect decisions and judgments by highlighting certain aspects over others.

Success Rate

A measure or percentage indicating the proportion of successes in a specific number of attempts or operations.

Failure Rate

A measure of the frequency at which an engineered system or component fails, expressed in failures per unit of time.