Increases in the market rate of interest subsequent to a bond issue increase the discount on the bond.

Question

Quizplus · Accepted Answer

Increases in the market rate of interest subsequent to a bond issue do not affect the discount or premium of the already issued bond; they affect the price of new bonds or the market value of existing bonds. The discount or premium on a bond at issuance is fixed based on the interest rates at that time.

Increases in the Market Rate of Interest Subsequent to a Bond