If the market interest rate is lower than the face interest rate at the date of issuance,bonds will
A)not sell until the face interest rate is adjusted.
B)sell at face value.
C)sell at a discount.
D)sell at a premium.

Question

Quizplus · Accepted Answer

When the market interest rate is lower than the face interest rate at the date of issuance, bonds are more attractive to investors because they offer a higher return compared to the current market rate. Therefore, these bonds will sell at a premium, meaning above their face value, as investors are willing to pay more for the higher interest income they provide.

If the Market Interest Rate Is Lower Than the Face