IF the bonds market rate of interest and stated rate of interest both are same than bonds will be issued at par to public. If the contractual (Stated rate) is higher than market rate than bonds are issued at discount and vice-versa if stated rate is lower than market Rate than bonds are sold at premium.
In above given case stated rate is 9% and market interest rate is 11% it means the bonds are sold at discounted value
Answer = Option B = A Discount.
Question 16 (0.5 points) If the contractual (stated) interest rate is 9% and the market (effective)...
Why would bonds ever sell at a premium? Stated Rate = Market Rate Stated Rate > Market Rate Stated Rate < Market Rate QUESTION 2 Why would bonds ever sell at a discount? Stated Rate = Market Rate Stated Rate > Market Rate Stated Rate < Market Rate QUESTION 3 At what amount do bonds sell for if the Stated Rate is equal to the Market Rate? QUESTION 4 $500,000, 10%, 20 year bonds sell at 102.These bonds are selling...
Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount:a. The market interest rate is 8%. Denton issues bonds payable with a stated rate of 7.75%.b. Starkville issued 8% bonds payable when the market interest rate was 8.25%.c. Houston issued 6% bonds when the market interest rate was 10%.d. Federal issued bonds payable that pay the...
Bond prices depend on the market rate of interest, stated rate of interest, and time. Determine whether the following bonds payable will be issued at face value, at a premium, or at a discount: a. The market interest rate is 8%, Idaho issues bonds payable with a stated rate of 2.75% b. Austin issued 9% bonds payable when the market interest rate was 8.25% c. Cleveland's Cars issued 10% bonds when the market interest rate was 10% d. Atlanta's Tourism...
When the stated interest rate is lower than the effective interest rate for a long-term note receivable, the note is issued at a value that reflects an average of the stated and effective interest rates. a premium. face value. a discount.
C) debit to interest Expense D) credit to Interest Expense 9) Under the effective-interest method of amortization, the cash payment on each interest paymer date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent...
9) Under the effective-interest method of amortization, the cash payment on each interest pas date will: A) remain the same for each interest period B) decrease if bonds are issued at a premium C) increase if bonds are issued at par D) increase if bonds are issued at a discount 10) Current liabilities fall into two categories, which are referred to as: A) contra liabilities and contingent liabilities B) contingent liabilities and non contingent liabilities C) liabilities of a known...
Dl credit to interest Expense 9) Under the effective interest method of amortization the cash samment on A C ntheforchrest period si decrease if bands are issued at a premium crease beds are med at par increase bends data 10) Current abilities fall into two categories which are referred to as A) contra labies and contingent liabilities B) contenties and non contingent l es Clities of a known amount and lateswho t ube be of known amount and contingent es...
if the market rate of interest is greater than the contractual rate of interest, bonds will sell
On January 1, Year 1, Young Company issued bonds with a face value of $115,000, a stated rate of interest of 17 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 16 percent at the time the bonds were issued. The bonds sold for $120,558. Young used the effective interest rate method to amortize the bond premium. Requireda. Determine the amount of the premium on...
6. The feature permits the issuer to repurchase bonds at a stated price prior to maturity. A. call D. capitalization 7. The thavalue of a bond is also called its face value. Bonds which sell at less face value are priced at awhile bonds which sell at greater than face value sell at a A. discount; par, premium B. premium; discount; par C par discount; premium D. coupon; premium; discount 8. If you invest $178,571 in a project that generates...