If the market rate of interest is 6%,a $10,000,10-year bond with a stated annual interest rate of 8% would be issued at an amount:
A)less than face value.
B)equal to the face value.
C)greater than face value.
D)equal to the face value minus a discount.

Question

Quizplus · Accepted Answer

If a bond offers something attractive,such as a high interest rate,bondholders may be willing to pay a premium to acquire it.As a result,if the market rate of interest is lower than the stated rate of interest,then the bonds will be issued at an amount greater than face value.

If the Market Rate of Interest Is 6%,a $10,000,10-Year Bond