Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-The effective interest rate on bonds is lower than the stated rate when bonds sell

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-The effective interest rate on bonds is lower than the stated rate when bonds sell

Quizplus · Accepted Answer

When bonds sell above face value, the effective interest rate is lower than the stated rate because the premium received reduces the overall cost of borrowing.

Use the Present Value and Future Value Tables Included in Appendix