If the market rate of interest is higher than the contract rate of interest offered on the bonds being sold, they will be sold at

Question

Quizplus · Accepted Answer

When the market rate of interest is higher than the contract rate of interest offered on the bonds being sold, investors will demand a higher rate of return to compensate for the lower rate of interest offered by the bonds. This results in the bonds being sold at a discount.

If the Market Rate of Interest Is Higher Than the Contract