Final answer:
Bonds selling at less than face value indicate that market interest rates have risen since the bond's issue, requiring the bond to be sold at a discount to remain competitive.
Step-by-step explanation:
When bonds sell at less than face value, it implies that the market interest rates have risen since the bond was issued. As interest rates increase, new bonds are issued with higher rates, making existing bonds with lower coupon rates less attractive. Therefore, existing bonds must be sold at a discount (below face value) to be competitive in the market. The present value calculation takes into account the bond's face value, coupon rate, maturity date, and current market interest rates to determine a bond's value.