If the market rate of interest is greater than the contractual rate of interest, bonds will sell:

a. at a premium.

b. at face value.

c. at a discount.

d. only after the stated rate of interest is increased.

Question

Jillian Grimes

Business

12 August, 10:30

If the market rate of interest is greater than the contractual rate of interest, bonds will sell:

a. at a premium.

b. at face value.

c. at a discount.

d. only after the stated rate of interest is increased.

+1

Answers (1)

Know the Answer?

Rocco Glover · Answer 1

c. at a discount.

Explanation:

If the market interest rate is greater than the contractual rate of interest, the bond will sell at a discount. It means that the bond is selling at a rate less than its par value.

If the market interest rate is less than the contractual rate of interest, the bond will sell at a premium. It means that the bond is selling at a rate higher than its par value.

If the market interest rate is equal to the contractual rate of interest, the bond will sell at par or at face value.

If the market rate of interest is greater than the contractual rate of interest, bonds will sell:a. at a premium.b. at face value.c. at a discount.d. only after the stated rate of interest is increased.

If the market rate of interest is greater than the contractual rate of interest, bonds will sell:

a. at a premium.

b. at face value.

c. at a discount.

d. only after the stated rate of interest is increased.