Which of the following statements regarding bond terminology is true?
A)The face value of a bond is what it is currently worth in the market.
B)The stated interest rate is expressed as an annual interest rate even if the bonds pay semiannual interest payments.
C)The stated rate of interest always presents the amount that investors are willing to pay for the bond on the issue date.
D)The carrying value of the bond is always equal to the face value of the bond.

Question

Quizplus · Accepted Answer

The stated interest rate is always expressed as an annual interest rate, regardless of whether the bond makes semiannual or annual interest payments. The face value of a bond is its original value and may be higher or lower than the current market value, while the carrying value of a bond is the value at which it is carried on a company's balance sheet and may differ from the face value. The stated rate of interest does not determine the price that investors are willing to pay for the bond on the issue date.

Which of the Following Statements Regarding Bond Terminology Is True