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Virty [35]
3 years ago
5

When the bonds are sold for more than their face value, the carrying amount of the bonds is equal to:_______

Business
1 answer:
frez [133]3 years ago
7 0

Answer:

b. Face value plus unamortized premium

Explanation:

When bonds are sold for more than their face value, such bonds are to be sold on <em>premium. </em>Mean that the in addition to the face value, an unamortized premium has been paid.

Such cases arises when the coupon payments made by bond are greater than the market rates.

Example: Let's say Samsung issues bonds at<u> 1</u><u><em>0% coupon rate for 5 years</em></u> bond while the market rate for the same <em><u>5 year bond is 8%</u></em>. The Samsung is said to have sold the bond on <u>premium.</u>

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