Under the effective-interest method of amortization for bonds, the cash payment on each interest payment date:
A) decreases over the life of the bond
B) increases over the first half of the life of the bond, and then decreases thereafter
C) is constant
D) increases over the life of the bond

Question

Quizplus · Accepted Answer

The effective-interest method of amortization for bonds results in a constant cash payment on each interest payment date, as this payment is determined by the fixed interest rate applied to the face value of the bond.

Under the Effective-Interest Method of Amortization for Bonds, the Cash