Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 61

In the past, Abbott Labs had two bond issues outstanding with the following characteristics:

Instructions
Answer the following questions regarding these bond issues:
a.hich issue, A or B, has the higher effective rate of interest How can you tell
b.ssume that the bonds of both issues had face values of $1,000 each.ow much cash did each bond from issue A provide investors in 12 months How much cash did each bond from issue B provide investors in 12 months
c.ote that both issues are by the same company, have the same contract rate of interest, and have identical credit ratings.n view of these facts, explain the current price difference of each issue.