When the market rate of interest is less than the contract rate of interest, the bonds should sell at
A)face value
B)a discount
C)par value
D)a premium

Question

Quizplus · Accepted Answer

When the market rate of interest is lower than the contract rate of interest on bonds, the bonds are more attractive to investors because they offer a higher return compared to the current market rate. Therefore, the bonds will sell for more than their face value, which is referred to as selling at a premium.

When the Market Rate of Interest Is Less Than the Contract