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A company has among its long-term debt, a bond due in 2015 that carries a face interest rate of 4.65 percent and pays interest annually.

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A company has among its long-term debt, a bond due in 2015 that carries a face interest rate of 4.65 percent and pays interest annually. Recently this bond sold on the New York Bond Exchange at 103.39. Assume that the company uses the effective interest method to amortize its bonds. Answer the following true/false questions and then select the appropriate multiple choice response. The current market rate of interest on this bond is less than 4.65 percent. The current market rate of the bond affects the amount that the company pays in annual interest. The current market rate of interest affects the amount of interest expense for the current year. A. True, False, True B. True, False, False C. False. True, False D. True, True, False E. False, True, True

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