Question :
51) Amortizing a bond discount will ________.
A) decrease the unamortized : 1253328
51) Amortizing a bond discount will ________.
A) decrease the unamortized bond discount
B) increase the unamortized bond discount
C) decrease the carrying value of the bond
D) decrease the unamortized bond discount and decrease the carrying value of the bond
52) Amortizing a bond premium will ________.
A) decrease the unamortized bond premium
B) increase the unamortized bond premium
C) decrease the carrying value of the bond
D) decrease the unamortized bond premium and decrease the carrying value of the bond
53) Amortization is the process of ________.
A) increasing a bond discount over the life of the bond
B) increasing a bond premium over the life of the bond
C) adjusting the carrying value of the bond over the life of the bond
D) depreciating tangible long-term assets
54) On January 1, 2011, Alpha Company issued $1,000,000 of 5%, 20-year bonds to buy a new computerized accounting system. The market rate of interest was 6%. The bonds pay interest annually on December 31. Alpha uses the effective interest method of amortization. With each annual interest payment the unamortized ________ will grow ________.
A) discount; larger
B) discount; smaller
C) premium; larger
D) premium; smaller
55) On July 1, 2011, Ace Electronics issued $10 million dollars of 8%, 20-year bonds at 102. The bonds pay interest semiannually on December 31 and June 30. How much cash did Ace receive when the bonds were issued?
A) $10,000,000
B) $10,200,000
C) $12,000,000
D) $102,000,000
56) On July 1, 2011, Ace Electronics issued $10 million dollars of 8%, 20-year bonds at 102. The bonds pay interest semiannually on December 31 and June 30. The bonds sold at 102 because ________.
A) the market rate of interest was higher than 8%
B) the market rate of interest was exactly 8%
C) the market rate of interest was lower than 8%
D) The answer cannot be determined from the information given.
57) On July 1, 2011, Ace Electronics issued $10 million dollars of 8%, 20-year bonds at 102. The bonds pay interest semiannually on December 31 and June 30. How much cash will Ace pay on December 31, 2011, the first interest payment date?
A) $800,000
B) $408,000
C) $400,000
D) $816,000
58) On July 1, 2011, Ace Electronics issued $10 million dollars of 8%, 20-year bonds at 102. The bonds pay interest semiannually on December 31 and June 30. How much cash will Ace pay when the bonds mature? Assume that the final interest payment is made separately.
A) $10,000,000
B) $10,200,000
C) $5,000,000
D) $102,000,000
59) Z Biz sold a 5-year, $1,000, zero-interest bond for $497.18 when the market rate of interest was 15%. The annual interest payment is ________.
A) $0
B) $150
C) $74.58
D) $502.82
Use the following information taken from a financial website to answer the following question(s):
COMPANY
Price
Coupon %
MATURITY
Current Yield
Fitch Ratings
IBM
109.62
5.050
22-Oct-2012
4.067
A
Ford MTR
58.00
7.700
15-May-2097
13.276
CCC
60) Refer to the information above. Will IBM’s annual interest expense be higher or lower than the amount of cash paid to investors for interest?
A) higher
B) lower
C) the same
D) The answer cannot be determined from the information given.
