Parseghian, inc. issued bonds with a maturity amount of $350,000 and a maturity five years from date of issue. if the bonds were issued at a premium, this indicates that the effective yield or market rate of interest exceeded the stated (nominal) rate. the nominal rate of interest exceeded the market rate. the market and nominal rates coincided. no necessary relationship exists between the two rates.
if bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
a. exceed what it would have been had the effective-interest method of amortization been used.
b. be less than what it would have been had the effective-interest method of amortization been used. c. be the same as what it would have been had the effective-interest method of amortization been used.
d. be less than the stated (nominal) rate of interest