1. Under what situation might a bond discount arise when issuing bonds?

Select one:

a. The effective or yield rate is less than the coupon rate.

b. The effective or yield rate is less than the market rate of interest.

c. The coupon rate is less than the cash rate of interest.

d. The coupon rate is less than the effective or yield rate.

2. Investco issued $30,000 of 6.25% bonds on January 1 at a discount of $2,107. Interest expense reported during the year totaled $1,875, while amortization amounted to $132. How much is the book value of the bonds on December 31?

Select one:

A. $28,025

B. $31,952

C. $27,816

D. $28,045