Question

With an interest-bearing note, the amount of assets received upon issuance of the note is generally

A. Equal to the note's face value.
B. Greater than the note's face value.
C. Less than the note's face value.
D. Equal to the note's maturity value.

Answer 1

The amount of assets received upon issuance of an interest-bearing note is generally equal to the note's face value, but its market value may fluctuate based on interest rates.

Step-by-step explanation:

With an interest-bearing note, the amount of assets received upon issuance of the note is generally equal to the note's face value. This face value is the amount that the borrower agrees to pay back to the investor at the maturity of the note. However, as the bond's present value is affected by market interest rates, it may trade above or below this face value after issuance, depending on whether the market interest rates have fallen or risen respectively.