When a bond sells for par value,its stated interest rate is ________.
A)equal to the market rate of interest
B)greater than the market rate of interest
C)less than the market rate of interest
D)irrelevant to investors

Question

Quizplus · Accepted Answer

When a bond sells for par value, it means that the stated interest rate on the bond is equal to the market rate of interest, and therefore the bond is selling at its fair value. This is because investors are willing to pay the par value when the interest rate offered by the bond is the same as the current market rate.

When a Bond Sells for Par Value,its Stated Interest Rate