A bond is issued at par value when:
A)The bond pays no interest.
B)The bond is not between interest payment dates.
C)Straight line amortization is used by the company.
D)The market rate of interest is the same as the contract rate of interest.
E)The bond is callable.

Question

Quizplus · Accepted Answer

A bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This means that the bond's stated interest rate is equal to the prevailing interest rate in the market, making it an attractive investment for investors. When a bond is issued at par value, it means that the bond is sold to investors for its face value, which is generally $1,000. The market value of the bond can go up or down depending on changes in interest rates or other factors, but the face value remains constant.

A Bond Is Issued at Par Value When