A bond is issued at par value when:
A)The bond pays no interest.
B)The issue price is greater than the maturity price.
C)Straight line amortization is used by the company.
D)The market rate of interest is the same as the contract rate of interest.
E)The contract rate and market rate of interest are different.

Question

Quizplus · Accepted Answer

A bond is issued at par value when the market rate of interest is the same as the contract rate of interest. This means that the bond's stated interest rate is equal to the prevailing market interest rate, and as a result, investors are willing to pay the full face value of the bond. The issue price is equal to the maturity price, and there is no premium or discount associated with the bond's sale.

A Bond Is Issued at Par Value When