A bond is issued at par value when:
A) Straight line amortization is used by the company.
B) The bond pays no interest.
C) The bond is callable.
D) The bond is not between interest payment dates.
E) The market rate of interest is the same as the contract rate of interest.

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 investors are willing to purchase the bond at its face value without requiring a premium or discount. If the market rate of interest is higher than the contract rate, the bond will be issued at a discount, and if the market rate of interest is lower than the contract rate, the bond will be issued at a premium. None of the other options listed necessarily mean that a bond is issued at par value.

A Bond Is Issued at Par Value When