Question
Callable bonds may be Turned in for early retirement at the option of the bondholder Converted to common stock at the option of the bondholder
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Callable bonds may be
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Turned in for early retirement at the option of the bondholder
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Converted to common stock at the option of the bondholder
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Called for early retirement at the option of the issuer
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Converted to registered bonds at the option of the company president
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None of the above is correct
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If the effective (market) interest rate for a bond is higher than the stated interest rate, the bond will sell at
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A discount
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A premium
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Par
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Both a and b are correct
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None of the above is correct
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If a bond payable is sold (issued) at a discount, the amount of the carrying value (the long term liability) reported on the subsequent balance sheets
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Remains constant
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Increases each year
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Decreases each year
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Changes from year to year depending upon the market rate of interest each year
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None of the above is correct
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On January 1, 2006, Broker Corp. issued $300 000 par value at %12, 10 year bonds which pay interest each December 31. If the market rate of interest was 14%, the issue price of the bonds should be? (The present value factor for $1 in 10 periods at 12% is 0.3220 and at 14% is 0.2697. The present value of an annuity of $1 factor for 10 periods at 12% is 5.6502 and at 14% is 5.2161).
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$3339 084
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$2843 172
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$3000 000
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$2686 896
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None of the above is correct
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