a. The bond pays 97½% interest. b. The bond trades at $975 per $1,000 bond. c. The market rate of interest is below the contract rate of interest for the bond. d. The bonds can be retired at $975 each. e. The bond's interest rate is 2½%.

a. The bond pays 97½% interest. b. The bond trades at $975 per $1,000 bond. c. The market rate of interest is below the contract rate of interest for the bond. d. The bonds can be retired at $975 each. e. The bond's interest rate is 2½%.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 13Q: A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market...

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Question

A bond traded at 971⁄2 means that

a. The bond pays 97½% interest.
b. The bond trades at $975 per $1,000 bond.
c. The market rate of interest is below the contract rate of
interest for the bond.
d. The bonds can be retired at $975 each.
e. The bond's interest rate is 2½%.

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