Choose all of the following that are true for a bond issued with 6 years until maturity, a principal of $1000, a coupon
Posted: Thu Apr 28, 2022 2:00 pm
Choose all of the following that are true for a bond issued with
6 years until maturity, a principal of $1000, a coupon of 5% and a
current yield of 6%?
a) Its current price will be about $1051
b) the cash received by the issuing company and recorded on
the balance sheet at the time of issue would be about $951
c) the discount recorded at the time of issue would be
about $45
d) at the end of the first year the issuer would record an
interest expense of about $57
e) at the end of the second year the issuer would amortize
about $7.47 of the discount
f) by maturity, the discount will have been completely
amortized so that the carrying value of the bond will equal the
principal amount in the bonds payable
Correct Answers include: b) d) f), but there is more correct
answers!!!
6 years until maturity, a principal of $1000, a coupon of 5% and a
current yield of 6%?
a) Its current price will be about $1051
b) the cash received by the issuing company and recorded on
the balance sheet at the time of issue would be about $951
c) the discount recorded at the time of issue would be
about $45
d) at the end of the first year the issuer would record an
interest expense of about $57
e) at the end of the second year the issuer would amortize
about $7.47 of the discount
f) by maturity, the discount will have been completely
amortized so that the carrying value of the bond will equal the
principal amount in the bonds payable
Correct Answers include: b) d) f), but there is more correct
answers!!!