Respuesta :
The effective interest rate method of amortizing bond discounts and premiums results in a constant amount of interest expense every period is true.
What does it mean when a bond is amortized?
An amortized bond is one in which, during the course of the bond's existence, both the principal (or face value) of the debt and the interest expense are consistently paid down. One frequent example is a fixed-rate home mortgage, where the monthly payment is fixed throughout the course of, say, 30 years. a technique for depreciating bonds that yields periodic interest costs equal to a fixed percentage of the bonds' carrying value.
The process of amortizing bonds involves allocating the premium or discounted amount to the interest payments for each term of the bond's validity.
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