CFAI Practice: M08 Liabilities & Equity

Total: 5 questions


Question 1

A bond issued at a discount will have a coupon rate that is:

  • A. Equal to the market interest rate at issuance
  • B. Higher than the market interest rate at issuance
  • C. Lower than the market interest rate at issuance

Question 2

Under the effective interest method, interest expense on a bond issued at a premium will:

  • A. Remain constant over the life of the bond
  • B. Increase over the life of the bond
  • C. Decrease over the life of the bond

Question 3

Under IFRS 16, a lessee classifies most leases as:

  • A. Operating leases with no balance sheet recognition
  • B. Finance leases only if they transfer ownership
  • C. A single model recognizing a right-of-use asset and lease liability

Question 4

In a defined benefit pension plan, the investment risk is borne by:

  • A. The employee
  • B. The employer
  • C. The plan administrator

Question 5

A company has total debt of 600. Its debt-to-equity ratio is closest to:

  • A. 0.40
  • B. 0.60
  • C. 0.67