Which of the following is correct about the effective-interest method of amortization?

Which of the following is correct about the effective-interest method of amortization?



a. The effective-interest method applied to investments in debt securities is different from that applied to bonds payable.
b. Amortization of a discount decreases from period to period.
c. Amortization of a premium decreases from period to period.
d. The effective-interest method produces a constant rate of return on the book value of the investment from period to period.


Answer: The effective-interest method produces a constant rate of return on the book value of the investment from period to period


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