The following items are associated with bonds: Face value Interest expense Carrying value

Question:

The following items are associated with bonds:
• Interest expense
• Carrying value
• Interest paid
• Amortization of discount or premium
• Balance in unamortized discount or premium
Required
Assuming that bonds are issued at (a) a discount and (b) a premium, identify whether each item will increase, decrease, or remain the same as the bond approaches maturity. Assume straight-line amortization of any discount or premium.
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...