If a company issues a note payable when the market rate of interest is less than the stated rate, then
A)the note will be discounted at maturity.
B)the cash received will be equal to the maturity value of the note.
C)the cash received will exceed the maturity value of the note.
D)the note will be issued at a discount.

Question

Quizplus · Accepted Answer

When the market rate of interest is less than the stated rate on a note payable, the note is considered more valuable because it pays interest at a higher rate than what is currently available in the market. Therefore, investors are willing to pay more for it, leading to the company receiving more cash than the note's maturity value.

If a Company Issues a Note Payable When the Market