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When a bond is issued for more than its face value, the market rate of interest is

A: equal to the interest rate stated on the bond.
B: independent of the interest rate stated on the bond.
C: higher than the interest rate stated on the bond.
D: less than the interest rate stated on the bond.

User Guy Levy
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1 Answer

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Final answer:

When a bond is issued for more than its face value, the market rate of interest is less than the interest rate stated on the bond.

Step-by-step explanation:

A bond is a form of debt that is issued by companies to raise money for new projects. It has a face value, coupon rate, and maturity date. When the market interest rate is higher than the interest rate stated on the bond, the bond will sell for less than its face value. Therefore, the correct answer is D: less than the interest rate stated on the bond.

User Lizz Parody
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