Match the following terms to the most appropriate answe r: the allocation of a p
ID: 2717046 • Letter: M
Question
Match the following terms to the most appropriate answer:
the allocation of a premium or discount over the life of a bond
the value reported on the income statement
the return required by the market on the day of issuance
if the contract rate exceeds the effective rate
the rate printed on the bond certificate
if the contract rate is less than the effective rate
face value times contract rate
A.contract rate
B.effective rate
C. bond discount
D.bond premium
E.interest expense
F.interest payment
G.amortization
Explanation / Answer
The matches are given below:
The allocation of a premium or discount over the life of a bond - G - amortisation
The value reported on the income statement - E - interest expnese
The return required by the market on the day of issuance - B - effective rate
If the constract rate exceeds the effective rate - D - bond premium
The rate printed on the bond certificate - A - contract rate
If the contract rate is less than the effective rate - C -bond discount
Face value times contract rate - F - interest payment
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