Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following best describes a discount bond?

A bond that is sold for more than its face (par) value.

A bond that does not pay any interest.

A bond that pays interest only at maturity.

A bond that is sold for less than its face (par) value.

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Verified step by step guidance

Understand the concept of a discount bond: A discount bond is a bond that is sold for less than its face (par) value. This occurs when the bond's coupon rate is lower than the prevailing market interest rate, making the bond less attractive unless sold at a discount.

Compare the given options to the definition of a discount bond: Evaluate each option to determine which aligns with the characteristics of a discount bond.

Option 1: 'A bond that is sold for more than its face (par) value' describes a premium bond, not a discount bond. Eliminate this option.

Option 2: 'A bond that does not pay any interest' refers to a zero-coupon bond, which is not necessarily a discount bond. Eliminate this option.

Option 3: 'A bond that pays interest only at maturity' is not a defining characteristic of a discount bond. Eliminate this option. The correct answer is Option 4: 'A bond that is sold for less than its face (par) value,' which matches the definition of a discount bond.