Ordinarily,the proceeds from the sale of a bond issue will be equal to:

Question

Quizplus · Accepted Answer

The proceeds from the sale of a bond issue represent the actual amount of money received by the issuer of the bond after all the expenses associated with the issuance of the bond have been deducted. The face amount of the bond, which is the principal amount that will be repaid at maturity, is not necessarily equal to the proceeds from the sale of the bond issue.

The best answer is C because it represents the present value of both the face amount and the stream of interest payments. This is because the market value of a bond is equal to the present value of its future cash flows, which includes both the face amount and the interest payments. Therefore, the proceeds from the sale of a bond issue will equal the present value of the face amount plus the present value of the stream of interest payments.

Ordinarily,the Proceeds from the Sale of a Bond Issue Will