If a debenture's stated interest rate is the same as 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 lower than the maturity value.

Question

Quizplus · Accepted Answer

If the stated interest rate is the same as the market rate, the debenture will be issued at par, which means the market value of the debenture will be equal to its face value (or maturity value) and investors will receive interest payments equal to the market rate. There would be no need to issue the debenture at a discount or premium if the stated interest rate matches the prevailing market rate. Option D is incorrect because the amount issued is not related to the stated or market interest rate.

If a Debenture's Stated Interest Rate Is the Same as the Market