D. True or False: Place an "X" in the appropriate column								True		False
1. The interest rate specified on the bond indenture is called the contract rate or
effective rate.							1.
2. If the market rate is lower than the contract rate, the bonds will sell at a
discount.							2.
3. When the maturities of bonds are spread over several dates, the bonds
are called serial bonds.							3.
4. The principal of each bond is also called the present value.							4.
5. When zero-coupon bonds are issued, the discount is amortized as
interest expense over the life of the bonds.							5.
6. The straight-line method of allocating bond discount provides for a
constant amount of interest expense each period.							6.
7. Bonds that may be exchanged for other securities under certain
conditions are called callable bonds.							7.
8. If the price paid to redeem bonds is below the bond carrying value,
the difference is recorded as a gain							8.
9. If the market rate is lower than the contract rate, the bonds will sell
at a premium.							9.
10. A corporation's earnings per share can be affected by whether it
finances its operations with common stock, preferred stock, or bonds.							10.