If the market interest rate is 6%, a $10,000, 7%, 5-year bond, that pays interest semiannually would sell at an amount:
A) less than face value.
B) equal to face value.
C) greater than face value.
D) the stated value.

Question

Quizplus · Accepted Answer

The bond's coupon rate (7%) is higher than the market interest rate (6%), making it more attractive, so it would sell at a premium, or greater than face value.

If the Market Interest Rate Is 6%, a $10,000, 7