Which of the following statements is TRUE about a debenture that is issued at a discount?
A)It will be sold for less than the face value.
B)Its interest rate is higher than the prevailing market rate.
C)It will be sold at par.
D)It will repay principal at less than the face value.

Question

Quizplus · Accepted Answer

A debenture that is issued at a discount means that it is sold for less than the face value, meaning the investor pays less than the promised principal amount at maturity. The interest rate may or may not be higher than the prevailing market rate. It is not sold at par and the principal amount at maturity is still the face value, not less.

Which of the Following Statements Is TRUE About a Debenture