Answered

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A bond issue with a face amount of $500,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:

Sagot :

Parrain

As a result of the interest rate being 8% and the coupon being 7%, these bonds will sell at a price less than $500,000.

Why would the bonds sell less than $500,000?

When a bond's coupon rate is less than the market rate of interest, it is referred to as a discount bond.

This means that the bond will be sold at a price that is less than its face value amount. In this case the market rate is higher than the coupon rate so the bond will sell for less than $500,000.

Find out more on discount bonds at https://brainly.com/question/23265123.

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