If a bond sells at a discount,the amortization of the discount will
A)Have interest payment each period equal to interest expense
B)Have interest payments each period greater than interest expense
C)Have interest payments each period less than interest expense
D)Have no effect on interest expense for the period
E)Have interest expense and interest payment computed on face value

Question

Quizplus · Accepted Answer

When a bond sells at a discount, the amortization of the discount increases the bond's book value over time, leading to interest expense being higher than the actual interest payments. This is because the interest expense includes both the actual interest payment and the amortization of the discount.

If a Bond Sells at a Discount,the Amortization of the Discount