Which of the following statements is true of a bond that is issued at a discount?
A)It will be sold at par.
B)Its stated interest rate is higher than the prevailing market rate.
C)It will repay a lesser amount than the face value at maturity.
D)It will be sold for less than the face value.

Question

Quizplus · Accepted Answer

A bond that is issued at a discount means that it is sold for less than its face value. This is because the coupon rate, or stated interest rate, is lower than the prevailing market rate, resulting in a lower selling price to compensate for the lower interest payments. At maturity, the bond will still repay the face value, but the initial investment will be less than the face value.

Which of the Following Statements Is True of a Bond