Question

g Bonds of ABC Corp. are currently priced at $932. The bonds have a face value of $1,000. Coupon payments occur twice per year. The bonds have 12 years left until maturity. These bonds are: a. discount bonds. b. premium bonds. c. par bonds. d. money market securities. e. deluxe bonds.

Answer 1

a. discount bonds

Step-by-step explanation:

When the Price of the Bond is less than the par value (face value) of the bond, we say that the bonds are trading at a discount.

When the Price of the Bond is greater than the par value (face value) of the bond, we say that the bonds are trading at a premium.

In this case the price is $932 and the face value is $1,000, thus the bonds are discount bonds.