Bonds

home / study / questions and answers / business / finance / an issuer of 2 years maturity bonds with a $100 …

Question

An issuer of 2 years maturity bonds with a $100 face value providing a 4% coupon rate paid every six months was issued with a premium of $4.

The payment by the issuer of one coupon combined with the amortization of the premium over the life of the bond results in

A.
a decrease in retained profits by $3.

B.
a decrease in retained profits by $4.

C.
a decrease in retained profits by $1.

D.
a decrease in retained profits by $8.