TRUE OR FALSE. Use the separate answer sheet.

$1.$ If the effective $($market$)$ interest rate is less than the coupon $($stated$)$ interest rate on the date that bonds are sold, the

bond price will be less than the face value of the bonds.

$2.$ The effective interest rate method of amortizing bond discount or premium can only be used when it doesn$$t

materially differ from the straight$-$line method, as the straight$-$line method is considered GAAP.

$3.$ A stock dividend converts earned capital into contributed capital, but total stockholder equity doesn$$t change.

$4.$ A bond$$s carrying value at maturity should equal its par or face value.

$5.$ Most corporations set a par value for their common shares at a fairly large number, such as $$100$ per share, in order

to minimize legal liability on the part of shareholders.

$6.$ Treasury shares are considered to be issued and outstanding.

$7.$ Paid$-$in capital in excess of par value will be created when a $50\%$ stock dividend is declared.

$8.$ All corporate charters $($which give corporations the right to exist$)$ are granted by the Securities Exchange

Commission in Washington D$.$C$.,$ an agency of the U$.$S$.$ federal government,

$9.$ All dividends, including liquidating dividends, are $$paid out$$ of retained earnings $($i$.$e$.$ reduce retained earnings$)$

$10.$ For dividends, the date of record comes before the date of declaration.