Question

The carrying value (amortized cost) of bonds will equal the market priceselect one:

a. the end of the fiscal
b. the close of every trading
c. the date of six months on the date interest is paid.

Answer 1

The carrying value of bonds does not always equal the market price. The market price is determined by supply and demand factors, while the carrying value is the book value of the bond. The two values may be different due to factors like discounts or premiums and changes in interest rates or issuer creditworthiness.

Step-by-step explanation:

The carrying value (amortized cost) of bonds will not always equal the market price. The market price of a bond is determined by supply and demand factors in the market and may be higher or lower than the carrying value. The carrying value is the book value of the bond, which is determined by the original cost of the bond and any amortization of discounts or premiums.

For example, if a bond with a face value of $1,000 is issued at a discount, such as $900, the carrying value initially would be $900. Over time, the carrying value of the bond would increase as the discount is amortized and become closer to the face value of $1,000. However, the market price of the bond may fluctuate depending on factors such as changes in interest rates or the creditworthiness of the issuer.