Skylar Company issued $50,000,000 of its 10% bonds at par on January 1,2019.On December 31,2019,the bonds were trading on the bond exchange at 102.5.Since the issue date,what has happened to the market rate of interest?
A)The market rate increased.
B)The market rate decreased.
C)The market rate stayed the same.
D)The change in the market rate cannot be determined.

Question

Quizplus · Accepted Answer

Since the bonds are trading at a premium, it means that the market rate of interest has decreased since the issue date.

Skylar Company Issued $50,000,000 of Its 10% Bonds at Par