A bond issue with a face amount of $500,000 bears interest at the rate of 10%.The current market rate of interest is also 10%.These bonds will sell at a price that is:

Question

Quizplus · Accepted Answer

When the market rate of interest and the coupon rate are the same, the bond will sell at its face or par value. Therefore, the bond issue will sell at a price equal to its face amount of $500,000.

A Bond Issue with a Face Amount of $500,000 Bears