If a debenture's stated interest rate is lower than the market rate, which of the following is TRUE?
A)The debenture will be issued at a discount.
B)The debenture will be issued at a premium.
C)The debenture will be issued at par.
D)The debenture will be issued for an amount higher than the maturity value.

Question

Quizplus · Accepted Answer

When a debenture's stated interest rate is lower than the market rate, it will be less attractive to investors, leading it to be issued at a discount to compensate for the lower interest income.

If a Debenture's Stated Interest Rate Is Lower Than the Market