For a bond issue that sells for less than the bond face amount,the stated interest rate is:

Question

Quizplus · Accepted Answer

If a bond is selling for less than its face amount, it is said to be trading at a discount. The stated interest rate remains the same, but the market rate (or yield rate) demanded by investors will be higher than the stated interest rate, which makes the bond less valuable in the market. Therefore, the stated rate is less than the market rate.

For a Bond Issue That Sells for Less Than the Bond