The issue price of a bond is always calculated at present value using the market rate of interest.

Question

Quizplus · Accepted Answer

The issue price of a bond is calculated by using the present value formula, which takes into account the market rate of interest. This is the rate of return investors expect to receive on their investment, and it is used to discount the future cash flows of the bond back to their present value. As such, the market rate of interest is an essential input in determining the issue price of a bond.

The Issue Price of a Bond Is Always Calculated at Present