Theta Company has prepared to sell bonds with a stated rate of 6% when the market rate is 5%.These bonds will sell in the market at
A)par.
B)a discount.
C)a premium.
D)stated value.

Question

Quizplus · Accepted Answer

Since the stated rate of the bonds is higher than the market rate, investors will be willing to pay more than the face value of the bond to receive the higher interest payments. This will result in the bonds selling at a premium, meaning a price higher than the face value.

Theta Company Has Prepared to Sell Bonds with a Stated