The U.S. government will pay Turner Company $2,500,000 each six months, equal to 2.5% of the $100 million face amount of the treasury bonds (5% annual coupon rate, paid in two installments each year), and will repay the $100 million at the end of five years. At the time Turner Company purchases the bonds, the market prices these bonds to yield Turner Company 6% annually (3% each six months). The
bonds are classified as held to maturity. Because the market requires a _____ than the _____ on the bonds, the bonds will sell on the market for a _____
a. lower yield; stated interest rate; premium
b. lower yield; market interest rate; premium
c. higher yield; stated interest rate; discount
d. lower yield; stated interest rate; discount
e. market yield; stated interest rate; premium
C
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On January 2, 2015, Wynn Corporation sold $750,000 of bonds for $745,000 . The bonds will mature in 10 years and pay interest annually on December 31 . Wynn properly recorded the payment of interest and amortization of the discount using the effective
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