When computing the issue price of a bond that has a stated rate of 8% payable semiannually and a market rate of 10%,the discount rate used would be
A)8%.
B)10%.
C)4%.
D)5%.

Question

Quizplus · Accepted Answer

The discount rate used to compute the issue price of a bond is the market rate, not the stated rate. Since the bond pays interest semiannually and the market rate is 10%, the semiannual discount rate is half of that, which is 5%.

When Computing the Issue Price of a Bond That Has