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A bond issue with a face amount of $1,100,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:
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A bond issue with a face amount of $1,100,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:

User Vwegert
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1 Answer

24 votes
24 votes

Answer:

d. Less than $1,100,000

Step-by-step explanation:

Here are the options

Equal to $100,000 O

O More than $100,000 o

O The answer cannot be determined from the information provide

d. Less than $1,100,000

If the current interest market rate is greater than the bonds coupon rate the bond is selling at a discount

If the current interest market rate is less than the bonds coupon rate the bond is selling at a premium

If a bond’s coupon rate is equal to its current interest market rate, then the bond is selling at par.

User Roy K
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2.5k points
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