Exam CFA-Level-I Topic 2 Question 1604 Discussion

Actual exam question for CFA's CFA-Level-I exam
Question #: 1604
Topic #: 2
A company issued 6-year, 10 percent bonds on September 1, 2000, for $91,619. The bonds have a maturity value of $100,000 and pay interest semiannually on March 1 and September 1. The market rate of interest at the date of issue was 12 percent. The company has an accounting year-end of December 31.
The amount of interest expense on March 1, 2001, is:

Suggested Answer: A Vote an answer

The interest expense for the six months from September 1, 2000, to March 1, 2001, would be $5,497 ($91,619 x .06). On December 31, 2000, four months would be recognized in the amount of
$ 3,665 ($5,497 x 4/6). The rest of the interest, two months, would be recognized on March 1, 2001. This amount would be $1,832 ($5,497 - $3,665).

by Kyle at Oct 28, 2025, 06:08 AM

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