Question

When interest rates have increased and bonds are retired before maturity, market value is:

A) above book value generating an accounting loss.

B) below book value generating an accounting loss.

C) below book value generating an accounting gain.

D) above book value generating an accounting gain.

The correct answer is C, but i am looking for an explanation or for someone to break down why C is the correct answer

Answer 1

answer:

explanation,

the option C is not the correct, the correct answer is the option (B )

• An organization may choose to resign bonds before development to lessen intrigue cost and expel obligation from its accounting report.
• An organization ought to resign obligation early just on the off chance that it has adequate money assets.
• Loan cost expands bond esteem diminishes.

so finally the answer is the option( B ) correct answer ( below book value generating an accounting loss.)