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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 discount of $2.

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

A.
a decrease in retained profits by $3.5.

B.
a decrease in retained profits by $1.5.

C.
a decrease in retained profits by $4.5.

D.
a decrease in retained profits by $2.5.