If the market rate of interest is greater than the bond's stated rate of interest, the bond will be issued at:

Question

Quizplus · Accepted Answer

When the market rate of interest is greater than the bond's stated rate of interest, the bond will be issued at a discount. This is because investors will demand a higher rate of return to compensate for the lower stated interest rate on the bond. The discount reflects the difference between the market rate and the stated rate of interest on the bond.

If the Market Rate of Interest Is Greater Than the Bond's