If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount
A) less than face value.
B) equal to the face value.
C) greater than face value.
D) that cannot be determined.

Question

Quizplus · Accepted Answer

The bond's coupon rate (12%) is higher than the market rate (10%), so it would sell at a premium, meaning greater than face value.

If the Market Rate of Interest Is 10%, a $10,000