41. If a bond has a stated rate of interest of 6%, but the market rate of interest is 8%, the bond
a. will sell at a discount.
b. will sell at a premium.
c. may sell at either a premium or a discount.
d. will sell at its face value.
42. When determining the proceeds received when issuing a bond, the factor applied to the amount of the interest payments is determined from the table of the
a. present value of 1.
b. present value of an annuity.
c. future value of 1.
d. future value of an annuity.
43. When determining the proceeds received when issuing a bond, the factor applied to the amount of the bond principal is determined from the table of the
a. present value of 1.
b. present value of an annuity.
c. future value of 1.
d. future value of an annuity.
44. If a bond has a stated rate of 10% and is discounted at 10%, then the proceeds received at issuance will be
a. equal to the face value of the bonds.
b. greater than the face value of the bonds.
c. less than the face value of the bonds.
d. zero.
45. Howard Company is about to issue $2,000,000 of 5-year bonds, with a stated rate of interest of 10%, payable semiannually. The market rate for such securities is 12%. How much can Howard expect to receive for the sale of these bonds?
a. $1,852,789.
b. $2,000,000.
c. $2,162,220.
d. None of these answer choices are correct.
Answers to Multiple Choice Questions