If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest annually would sell at an amount
A)less than face value.
B)equal to face value.
C)greater than face value.
D)that cannot be determined.

Question

Quizplus · Accepted Answer

The bond's coupon rate (12%) is higher than the market rate (10%), making it more attractive, so it would sell at a premium, or greater than face value.

If the Market Rate of Interest Is 10%, a $10,000