The cash proceeds received from issuing a bond are less than the face value of the bond. It is apparent that the bond was issued at:
A) face value
B) a premium
C) par value
D) a discount

Question

Quizplus · Accepted Answer

When a bond is issued at a discount, the cash proceeds received from the issuance are less than the face value of the bond. This occurs when the bond's coupon rate is lower than the market interest rate, making the bond less attractive to investors. As a result, the bond is sold at a discounted price, meaning the issuing company receives less cash than the bond's face value.

The Cash Proceeds Received from Issuing a Bond Are Less