Which of the following statements is true: Straight line interest method on bonds gives a higher interest in the first year than effective interest if bonds are issued at a discount; When bonds are issued for more than par, straight line interest method gives higher interest expense in the last year than using effective interest rate; Straight line interest yields a constant interest expense but a changing interest rate. Multiple Choice All of these are false I) and III) are true but II) is false All of these are true I) and II) are true but III) is false I) is true but II) and III) are false
Which of the following statements is true: Straight line interest method on bonds gives a higher interest in the first year than effective interest if bonds are issued at a discount; When bonds are issued for more than par, straight line interest method gives higher interest expense in the last year than using effective interest rate; Straight line interest yields a constant interest expense but a changing interest rate. Multiple Choice All of these are false I) and III) are true but II) is false All of these are true I) and II) are true but III) is false I) is true but II) and III) are false
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Which of the following statements is true:
- Straight line interest method on bonds gives a higher interest in the first year than effective interest if bonds are issued at a discount;
- When bonds are issued for more than par, straight line interest method gives higher interest expense in the last year than using effective interest rate;
- Straight line interest yields a constant interest expense but a changing interest rate.
Multiple Choice
-
All of these are false
-
I) and III) are true but II) is false
-
All of these are true
-
I) and II) are true but III) is false
-
I) is true but II) and III) are false
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