8. If a bond sells at a premium, which of the following is true?

a. The market interest rate is expected to increase above the stated interest rate on the bond.

b. The market interest rate at the time of issue is less than the stated interest rate on the bond.

c. The market interest rate at the time of issue is the same as the stated interest rate on the

bond issue.

d. The market interest rate at the time of issue is greater than the stated interest rate on the

bond.

9.

On January 1, 2018, Ink, Inc. borrowed $100,000 cash from Fidelity Bank on a note that

had a 6% annual interest rate and a five-year term. The loan is to be repaid in annual

payments of $23,741.69 on January 1 each year. The amount of the January 1, 2019,

payment applied to interest and to principal would be

a. $6,000 / $17,741.69.

b. $17,741.69 / $94,000.

c. $4,935.50 / $82,258.31.

d. $6,000 / $94,000.

10. XYZ Company experienced an accounting event that affected its financial statements as

indicated below:

Assets

=

Liab.

+

Equity

Rev.

Exp.

=

Net

Inc.

Cash Flow

+

+

NA

NA

NA

NA

+ FA

Which of the following events could have caused these effects?

a. A bond issued at face value.

b. A bond issued at a discount.

c. A bond issued at a premium.

d. All of the above.

11. The XP Corporation had the following shares of stock outstanding at December 31, 2018:

Common Stock, $50 par value, 40,000 shares outstanding; and Preferred Stock, 6 percent,

$100 par value, cumulative, 10,000 shares outstanding. Dividends for 2016 and 2017 were

in arrears. On December 31, 2018, XP declared total cash dividends of $250,000. The

total amounts payable to preferred stockholders and common stockholders, respectively,

are:

a. $60,000 / $190,000.

b. $120,000 / $130,000.

c. $180,000 / $70,000.

d. $125,000 / $125,000.