Which of the Following Is True of Accrued Interest on Bonds

question 68

Multiple Choice

Which of the following is true of accrued interest on bonds that are sold between interest dates?

• A) It is computed at the effective market rate.
• B) It will be paid to the seller when the bonds mature.
• C) It is extra income to the buyer.
• D) None of these is true.

---

Definitions:

Payments

The act of transferring money to fulfill an obligation, such as in purchasing goods or services or repaying a loan.

Penalty

A punishment imposed for breaking a law, rule, or contract, which often involves paying a fine or forfeiting something.

Mark-Up

The amount added to the cost of a product or service to cover overhead and profit.

Selling Price

The amount of money for which a product is sold to the customer, after accounting for discounts, rebates, and other adjustments.