If the market interest rate is greater than the stated interest rate on bonds,the bonds will sell:
A)at face value.
B)at a discount.
C)at a premium.
D)at the stated interest rate.

Question

Quizplus · Accepted Answer

If the market interest rate is greater than the stated interest rate on bonds, the bonds will sell at a discount. This is because investors can earn a higher return on their investment by buying bonds with a higher interest rate. As a result, the price of bonds with a lower interest rate will decrease to make them more attractive to investors.

If the Market Interest Rate Is Greater Than the Stated