If the market interest rate is greater than the stated interest rate on bonds, bonds will sell:
A)at face value.
B)at a discount.
C)at a premium.
D)at the stated interest rate.

Question

Quizplus · Accepted Answer

When the market interest rate is greater than the stated interest rate on bonds, the bonds will sell at a discount because investors will not be willing to pay face value for a bond that pays a lower interest rate than they can get from other investments.

If the Market Interest Rate Is Greater Than the Stated