Which of the following statements about bond terminology is correct?
A)The face value of a bond is what it is currently worth in the market.
B)The stated interest rate is expressed as an annual interest rate even if the bonds pay semiannual interest payments.
C)The stated rate of interest always presents the amount that investors are willing to pay for the bond on the issue date.
D)The carrying value of the bond is always equal to the face value of the bond.

Question

Quizplus · Accepted Answer

The stated interest rate is always expressed as an annual rate although many bonds require interest payments every six months (that is,semiannually).The face value (or principal)of the bond is printed on the bond certificate;it is not necessarily what the bond is worth since the current rate changes daily.After a bond has issued,the market's desired rate fluctuates frequently,which affects the bond price in the market.The carrying value is equal to the face value plus any related premium or less any related discount.

Which of the Following Statements About Bond Terminology Is Correct