When the contract rate on a bond issue is less than the market rate, the bonds will generally sell at a discount.

Question

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When the contract rate on a bond issue is less than the market rate, it means the bond's interest rate is lower than the current market interest rate. As a result, investors are not willing to pay the full face value or par value for the bond. Thus, the bonds will generally sell at a discount, which means the bond's price is lower than the face value.

When the Contract Rate on a Bond Issue Is Less