A bond issued at a discount will pay total cash payments for interest that are more than the total interest expense recognized over the life of the bond.

Question

Quizplus · Accepted Answer

A bond issued at a discount means that it is sold for less than its face value. As a result, the total cash payments for interest will be less than the total interest expense recognized over the life of the bond. This is because the bondholder receives less cash in interest payments than what is recognized as an expense by the issuing company.

A Bond Issued at a Discount Will Pay Total Cash