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 market value.

Question

Quizplus · Accepted Answer

When the market interest rate is greater than the stated interest rate on bonds, it means that the bond is offering a lower return on investment compared to the market. In such a scenario, investors would not be willing to pay the full face value of the bond and instead demand a discount (below face value) to make up for the lower return. Therefore, bonds will sell at a discount.

If the Market Interest Rate Is Greater Than the Stated