If a bond is issued at 98, the stated rate of interest was
A) higher than the market rate of interest.
B) lower than the market rate of interest.
C)equal to the market rate of interest.
D)not related to the market rate of interest.

Question

Quizplus · Accepted Answer

If a bond is issued at 98, it means that the bond is sold for 98% of its face value. This indicates that the stated rate of interest is lower than the market rate of interest. Investors are willing to pay less for the bond because the interest rate is not as attractive as other available investments.

If a Bond Is Issued at 98, the Stated Rate