If a company sells its bonds at more than face value, the effective interest rate is
A)less than the contract interest rate
B)more than the contract interest rate
C)equal to the contract interest rate
D)more than the market interest rate

Question

Quizplus · Accepted Answer

When bonds are sold at more than face value, it indicates that the market interest rate is lower than the contract interest rate, making the effective interest rate less than the contract interest rate.

If a Company Sells Its Bonds at More Than Face