From the CFAI accounting book, page 173 on intercorporate investments.
The question is on page 167, question 17: Confabulated reported interesti ncome would be lower if the cost was the same, but the par value of:
Answer: B Cathay was 37,000.
This answer matches the Cathay Corp (Held-to-maturty) MV as of 12/31/09. The cost of 40,000.
Answer: page 173
The difference between historical cost and par value must be amortized under the effect interest method. If the par value is less than the initial cost (stated interest rate is greater than the effective rate), the interest income would be lower than the interest received because of amoritzation of the premium.