A bond issue with a face amount of $500,000 bears interest at the rate of 7%.The current market rate of interest is 8%.These bonds will sell at a price that is:

Question

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When the market interest rate is higher than the coupon rate of a bond (8% > 7% in this case), the bond will sell at a discount, meaning its price will be less than its face value of $500,000.

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