Which of the following statements is true if a bond is issued for an amount equal to its face value?
A)The bond's stated interest rate is less than the prevailing market interest rate at time of sale.
B)The bond's stated interest rate is the same as the prevailing market interest rate at time of sale.
C)The bond's stated interest rate is more than the prevailing market interest rate at time of sale.
D)The bond is not secured by specific assets of the issuer.

Question

Quizplus · Accepted Answer

If a bond is issued for an amount equal to its face value, it means that the bond is sold at par. This implies that the bond's stated interest rate is the same as the prevailing market interest rate at the time of sale, as investors would not be willing to pay more or less for the bond if the rate did not match the market.

Which of the Following Statements Is True If a Bond