1. When the effective yield of a bond is the same as the coupon rate on the bond
ID: 2443318 • Letter: 1
Question
1. When the effective yield of a bond is the same as the coupon rate on the bond, the bond is sold at:a) A discount.
B) A premium.
C) Par.
d) A price above par.
2. When a bond is sold at a discount the effective interest rate is:
a) equal to the coupon rate.
b) above the coupon rate.
c) below the coupon rate.
d) equal to the coupon rate for a period of time and then above the coupon rate for a period of time.
3. To remain in accordance with GAAP, operating leases require footnote disclosure of the:
a) amount of annual rental payments.
b) discounted present value of future lease payments.
c) undiscounted present value of future lease payments.
d) future cash outflows arising from operating leases.
4. Temporary differences that will cause taxable income to be higher than book income in future periods give rise to:
a) deferred tax assets.
b) deferred tax liabilities.
c) permanent differences.
d) tax refund receivable.
Explanation / Answer
1. When the effective yield of a bond is the same as the coupon rate on the bond, the bond is sold at: C) Par. 2. When a bond is sold at a discount the effective interest rate is: b) above the coupon rate. 3. To remain in accordance with GAAP, operating leases require footnote disclosure of the: c) undiscounted present value of future lease payments. 4. Temporary differences that will cause taxable income to be higher than book income in future periods give rise to: d) tax refund receivable.
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