Use the Following Information for Questions 46 Through 48

Use the following information for questions 46 through 48.
Chang Corporation issued $4,000,000 of 9%, ten-year convertible bonds on July 1, 2014 at 96.1 plus accrued interest. The bonds were dated April 1, 2014 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2015, $800,000 of these bonds were converted into 500 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion.
-What was the effective interest rate on the bonds when they were issued?

A) 9%
B) Above 9%
C) Below 9%
D) Cannot determine from the information given.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free