Why are bonds sometimes issued at a discount?
A)The stated rate of interest is higher than the rate being paid on investments in the securities market with comparable risk.
B)The stated rate of interest is the same as the rate being paid on investments in the securities market with comparable risk.
C)The stated rate of interest is lower than the rate being paid on investments in the securities market with comparable risk.
D)The bonds are being issued between interest payment dates.

Question

Quizplus · Accepted Answer

Discounting is necessary to increase the interest on the bond so that the effective rate is equal to the market rate of interest.

Why Are Bonds Sometimes Issued at a Discount