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NEW QUESTION: 1
A. Option B
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The interest expense on a discount bond _______ over time.
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D. decreases
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Remember that the book value of the liability of any straight bond equals the face value at maturity. Hence, when the bond is issued at a discount, the discount amount is amortized over the life of the bond. The outstanding liability thus increases steadily toward the face value. The increasing liability increases the interest expense over time.
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