Notes Payable Selected information for Morgan Inc for a recent fiscal year is presented below (dollar amounts in millions): Note Reported Book Value, 6/30/2018 Reported Book Value, 6/30/2019 Stated Interest Rate Effective Interest Rate October 1, 2020 1,000 1,000 3.00% 3.14% May 1, 2023 1,000 1,000 2.38% 2.47% December 6, 2028 2,044 1,993 3.13% 3.22% Required: (1) Are the May 1, 2023 notes recorded at a discount or a premium? Why? (2) Assume that Moody's reports that the October 1, 2020 notes were originally rated as Aaa. (a) If Moody's lowers the rating to Aa1 (which signals an increase in risk), what is the effect on the effective interest rate? Would it be higher, lower or the same? (b) If the notes had been secured by collateral, would the effective interest rate have been higher, lower, or the same? (3) (a) Are the December 6, 2028 notes recorded at a discount or a premium? Why? (b) What explains the decrease in the notes from the beginning to the end of the fiscal year