1. A bond issue with a face amount of $505,000 bears interest at the rate of 7%. The current market rate of interest is 6%. These bonds will sell at a price that is:

A.Less than $505,000.

B.The answer cannot be determined from the information provided.

C.More than $505,000.

D.Equal to $505,000.

2. A bond issue with a face amount of $509,000 bears interest at the rate of 10%. The current market rate of interest is also 11%. These bonds will sell at a price that is:

A. Equal to $509,000.

B. Less than $509,000.

C. The answer cannot be determined from the information provided.

D. More than $509,000.

3. Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2018. THA's accountant has projected the following amortization schedule from issuance until maturity:

Date	Cash Paid	Interest Expense	Increase in Carrying Value	Carrying Value
1/1/2018				$370,823
6/30/2018	$19,500	$22,249	$2,749	373,572
12/31/2018	19,500	22,414	2,914	376,486
6/30/2019	19,500	22,589	3,089	379,575
12/31/2019	19,500	22,775	3,275	382,850
6/30/2020	19,500	22,971	3,471	386,321
12/31/2020	19,500	23,179	3,679	390,000

THA buys back the bonds for $375,016 immediately after the interest payment on 12/31/2018 and retires them. What gain or loss, if any, would THA record on this date?

A. $4,193 loss

B. $1,470 gain

C. $14,984 gain

D. No gain or loss