At the beginning of the year a company issued a $
At the beginning of the year, a company issued a $1,000 face value bond.Interest on that bond is paid semiannually, the annual coupon rate on the bond is 9%, and the bond matures in ten years.The market rate of the interest at the time the bond was issued was 10% on an annual basis.The amount of the initial liability recorded for this bond was closest to:
A.$938.
B.$961.
C.1,065.
参考解答
462***991
2024-10-27 10:04:50
Ans:A.
The liability and interest expense recorded are both based on market rates of interest when the bond was issued, not the coupon rate on the bond.The market value of the bond at issuance was $937.68.(FV=1000, PMT=45, N=20, i=5.0).
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