If the market interest rate is greater than the stated interest rate on bonds, the bonds will sell: ___________

a. at a premium.
b. at a discount.
c. at face value.
d. only after the stated interest rate is increased

Respuesta :

Answer:

Option B, at a discount, is the right answer.

Explanation:

Bond is a kind of security or it is a liability for a company that occurs by issuing the bonds to the public. We find that if the stated interest rate on bonds is lower than the market interest rate then the general public will not buy bonds. Therefore, it becomes essential for a company to issue bonds at a discount rate so that it can attract the general public.  It is the same case in the given question, therefore, the company will issue bonds at a discount rate.