Your company is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15,2022.If interest rates fall in the economy so that similar financial investments pay 5%,your company will:
A)not be able to issue the bonds because no one will buy them.
B)receive a higher issue price as buyers compete for the bonds.
C)have to accept a lower issue price to attract buyers.
D)have to reprint the bond certificates to change stated interest rate to 5%.

Question

Quizplus · Accepted Answer

If a bond offers something attractive,such as a high interest rate,bondholders may be willing to pay a premium to acquire it.As a result,if the market rate of interest is lower than the stated rate of interest,then the bonds will be issued at an amount greater than face value.

Your Company Is Planning to Issue $1,000 Bonds with a Stated