Matching
Match the following descriptions to their terms
Premises:
the allocation of a premium or discount over the life of a bond
face value times contract rate
if the contract rate is less than the effective rate
the value reported on the income statement
the rate printed on the bond certificate
the return required by the market on the day of issuance
if the contract rate exceeds the effective rate
Responses:
amortization
interest expense
effective rate
bond premium
contract rate
bond discount
interest payment
Correct Answer:
Premises:
Responses:
the allocation of a premium or discount over the life of a bond
face value times contract rate
if the contract rate is less than the effective rate
the value reported on the income statement
the rate printed on the bond certificate
the return required by the market on the day of issuance
if the contract rate exceeds the effective rate
Premises:
the allocation of a premium or discount over the life of a bond
face value times contract rate
if the contract rate is less than the effective rate
the value reported on the income statement
the rate printed on the bond certificate
the return required by the market on the day of issuance
if the contract rate exceeds the effective rate
Responses:
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