A company issues an ordinary bond which pays both coupon payments and the face value upon retirement. If the market (effective) rate of interest is less than the coupon rate at the issue date, then A. None of the other answers are correct. B. the bond is issued at a premium. C. the bond is issued at face value. D. the bond is issued at a discount.

Capitalized interest is A. interest costs on long-term debt which amortize any premium or discount on the debt. B. the value of a tangible asset to the operations of the firm. C. None of the other answers are correct. D. an estimate of the opportunity cost of funds tied up in an asset under construction, which is capitalized to the cost of the asset.

Question 15 of 51 When classifying investments in equity securities using the standard rules of thumb: A. The Parent firm should use the Equity Method only if they own between 25% and 50% of the Subsidiary. B. The Parent firm should use the Fair Value Method only if they own up to 20% of the stock of the Subsidiary. C. None of the other answers are correct. D. The Parent firm should consolidate the Subsidiary only if they plan to hold it to maturity.