Which of the following statements is true of a bond that is issued at a discount?
A)The bond will be issued at par.
B)The stated interest rate is higher than the prevailing market interest rate.
C)At maturity,the bond will repay an amount that is less than the face value.
D)The bond will be issued for an amount less than the face value.

Question

Quizplus · Accepted Answer

A bond issued at a discount means that the bond is sold for less than its face value. The face value is the amount that the bond will repay at maturity. Therefore, option D is the correct answer. Option A is incorrect because the bond is issued at a discount, not at par. Option B is incorrect because if the stated interest rate is higher than the prevailing market interest rate, the bond would be issued at a premium, not a discount. Option C is incorrect because the face value of the bond is the amount that will be repaid at maturity, and it will not be less than the face value.

Which of the Following Statements Is True of a Bond