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31 December, 12:30

If a bond's stated interest rate is lower than the market rate, which of the following is true? A) The bond will be issued at par. B) The bond will be issued at a premium. C) The bond will be issued at a discount. D) The bond will be issued for an amount higher than the maturity value.

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  1. 31 December, 12:42
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    Answer: Option C

    Explanation: If the stated interest rate of a bond is lower than the market interest rate then the investors purchasing the bond will receive less benefit than others in market. Therefore the security will not be a good option to purchase. Hence the company must lower the prices of bonds to attract the investor to purchase it.

    Hence from the above we can conclude that the bonds will be sold at a discount.
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Home » Business » If a bond's stated interest rate is lower than the market rate, which of the following is true? A) The bond will be issued at par. B) The bond will be issued at a premium. C) The bond will be issued at a discount.
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