1. If adjustments to the financial statements were not made, what would be the effect on the financial results?
a. No effect would result because adjustments do not reflect cash paid or received. b. There would be little effect because any items not recognized in the reporting period would be recognized the next reporting period. c. The financial statements would present an incomplete and misleading picture of company financial performance. d. There would be no effect because some adjustments increase net income and others decrease it, canceling each other out.
2. A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now?
a. $865.00 b. $930.11 c. $883.61 d. $744.09 e. $976.62