A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is 11%. These bonds will sell at a price that is:
A) Equal to $500,000.
B) More than $500,000.
C) Less than $500,000.
D) The answer cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

When the market rate of interest is higher than the bonds' stated rate, the bonds will sell at a discount.

A Bond Issue with a Face Amount of $500,000 Bears