AB Company issued a $100,000, 10%, bond at $99.Therefore, the bond:
A)sold at a premium because the $1,000 accrued interest is added to the $100,000 face amount.
B)was sold at a premium because the stated interest rate was higher than the yield rate.
C)sold at a discount because the stated interest rate was lower than the market interest rate.
D)was sold for $100,000 less $1,000 of accrued interest.

Question

Quizplus · Accepted Answer

The bond was sold at a discount because it was issued at $99 for every $100 of face value, indicating the market interest rate was higher than the bond's stated interest rate of 10%.

AB Company Issued a $100,000, 10%, Bond at $99