1. On January 1, 2012, Microsport, Inc., purchased $120,000 face value of the 9% bonds of Service...

Question:

1. On January 1, 2012, Microsport, Inc., purchased $120,000 face value of the 9% bonds of Service Express, Inc., at 104. The bonds mature on January 1, 2017. For the year ended December 31, 2015, Microsport received cash interest of

a. $9,800.

b. $8,800.

c. $10,800.

d. $11,800.

2. Return to Microsport, Inc.’s bond investment in the preceding question. For the year ended December 31, 2015, Microsport received cash interest of $10,800. What was the interest revenue that Microsport earned in this period?

a. $9,800

b. $9,840

c. $11,800

d. $8,800

3. The present value of $5,000 at the end of eight years at 5% interest is

a. $5,000.

b. $32,315.

c. $3,385.

d. $4,228.

4. Which of the following is not needed to compute the present value of an investment?

a. The interest rate

b. The length of time between the investment and future receipt

c. The amount of the receipt

d. The rate of inflation

5. What is the present value of bonds with a face value of $5,000; a stated interest rate of 6%; a market rate of 8%; and a maturity date four years in the future? Interest is paid semiannually.

a. $5,000

b $4,663

c. $5,393

d. $3,947

6. Consolidation of a foreign subsidiary usually results in a

a. foreign-currency transaction gain or loss.

b. foreign-currency translation adjustment.

c. gain or loss on consolidation.

d. LIFO/FIFOdifference.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...