8.

Which of the following is the primary source of corporate equity financing?

A) Bonds Payable.

B) Notes Payable.

C) Common Stock.

D) Leases.

9.

Term bonds are:

A) Bonds that mature in installments.

B) Bonds issued below the face amount.

C) Bonds issued above the face amount.

D) Bonds that mature all at once.

10.

In each succeeding payment on an installment note:

A) The amount of interest expense is unchanged.

B) The amounts paid for both interest and principal increase proportionately.

C) The amount of interest expense decreases.

D) The amount of interest expense increases.

14. Discount-Mart issues $10 million in bonds on January 1, 2018. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:

Date	Cash Paid	Interest Expense	Increase in Carrying Value	Carrying Value
1/1/2018				$8,640,967
6/30/2018	$300,000	$345,639	$45,639	8,686,606
12/31/2018	300,000	347,464	47,464	8,734,070
6/30/2019	300,000	349,363	49,363	8,783,433
12/31/2019	300,000	351,337	51,337	8,834,770

What is the market annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate.)

A) 3%.

B) 6%.

C) 4%.

D) 8%

15. Given the information below, which bond(s) will be issued at a premium?

	Bond 1	Bond 2	Bond 3	Bond 4
Stated Rate of Return	7%	12%	10%	8%
Market Rate of Return	8%	10%	10%	9%

A) Bond 2.

B) Bond 1.

C) Bonds 2 and 4.

D) Bond 3.

16.

Which of the following is not a true statement?

A) As a company's level of debt increases, the risk of bankruptcy increases.

B) The mixture of liabilities and stockholders' equity a business uses is called its capital structure.

C) Companies that are believed to have high bankruptcy risk generally receive low credit ratings and must pay a higher interest rate for borrowing.

D) Interest expense incurred when borrowing money, as well as dividends paid to stockholders, are both tax-deductible.

19. Bonds payable should be reported as a long-term liability in the balance sheet at:

A) Face value less accrued interest since the last interest payment date.

B)Face value.

C)Current bond market price.

D)Carrying value.