Bond: The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense. The meaning of bond traded at 97 1 / 2

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Can you explain the correct approach to solve this general accounting question?

During a specific period, Norton Enterprises reported a decrease in total assets of $18,700 and a decrease in stockholders' equity of $7,200. By what amount and direction must total liabilities have changed during that same period?

What was the sales price per unit ?

Answer 2

Question

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Answer 6

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.

Answer 7

Chapter 10, Problem 1MCQ

To determine

Bond:

The bond is a kind of security which is used for debt investment. The investor finances a certain amount of money for a determined time period and interest rate. The amount which is paid as an interest on the time of issuance of the bond is known as the bond interest expense.
The meaning of bond traded at 971/2

Answer 8

Expert Solution & Answer

Explanation of Solution

Option b, the bond trades at $975 per $1,000 is correct.

b. The bond traded at 971/2 means that the bond is traded at $975 per $1,000 bonds. The trading amount shows the actual cost of the bond in the market.

a. The bond pays 971/2% is wrong as the bond traded at 971/2 does not has any relation with the value of the interest.

c. The meaning of the bond trading at 971/2 does not means that the market rate of interest is below the contract rate of interest for the bond. This only shows that the bond will be traded at $975 per $1,000.

d.

The bond trading at

971/2 does not means that the bond can be retired at $975 each. This only shows that at what value the bonds can be traded.

e. The bond’s interest rate is 21/2% is wrong as the bond traded at 971/2 does not has any relation with the rate of interest, it shows the trading value of the bonds.

Thus, the option b. is correct.