Answer:
b. Lower Higher
Step-by-step explanation:
As non interest bearing notes are issued on deep discounted value. The face value of the note is discounted to calculate the cash receipt from the issuance. So, the cash received will be higher than the face value of the note.
If the non interest bearing note is issued on a discounted value the effective interest rate will be higher than the discount rate of the bond because the investor demands the required rate of return which is used to discount and calculating effective rate using discounted value will result the higher rate.