ZuoTi.Pro
Question

A bond is issued with a face amount of $500,000 and a stated interest rate of 10%


A bond is issued with a face amount of $500,000 and a stated interest rate of 10%. The current market rate of interest is 8%. These bonds will sell at a price that is: 

Multiple Choice 

  • Equal to $500,000 

  • Less than $500,000 

  • More than $500,000. 

  • The answer cannot be determined from the information provided.

business   accounting   
1 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

More than $500,000

Since the stated interest rate is more more than the market rate, the bond would sell at a premium.

1 1
Add a comment
Know the answer?
Add Answer to:
A bond is issued with a face amount of $500,000 and a stated interest rate of 10%
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A bond issue with a face amount of $506,000 bears interest at the rate of 10%....

    A bond issue with a face amount of $506,000 bears interest at the rate of 10%. The current market rate of interest is also 10%. These bonds will sell at a price that is: Multiple Choice More than $506,000. Equal to $506,000. Less than $506,000. The answer cannot be determined from the information provided. A bond issue with a face amount of $507,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds...

  • A bond issue with a face amount of $900,000 bears interest at the rate of 10%....

    A bond issue with a face amount of $900,000 bears interest at the rate of 10%. The current market rate of interest is 11%. These bonds will sell at a price that is: Multiple Choice Equal to $900,000. More than $900,0 00 Less than $900,000. The answer cannot be determined from the information provided.

  • 2. A bond issue with a face amount of $509,000 bears interest at the rate of...

    2. A bond issue with a face amount of $509,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is: Multiple Choice A. Less than $509,000. B. More than $509,000. C. The answer cannot be determined from the information provided. D. Equal to $509,000.

  • A bond issue with a face amount of $800.000 bears interest at the rate of 9%....

    A bond issue with a face amount of $800.000 bears interest at the rate of 9%. The current market rate of interest is 11%. These bonds will sell at a price that is: Multiple Choice More than $800,000 Equal to $800,000 Less than $800,000 The answer cannot be determined from the information provided.

  • Alexi Co. issued $4.00 million face amount of 7%, 10-year bonds on June 1, 2019. The...

    Alexi Co. issued $4.00 million face amount of 7%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year. Required: a. Assume that the market interest rates were slightly higher than 7% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Multiple Choice The bonds will sell for less than their face amount. The bonds will...

  • If the bond sells for more than the bond face amount the stated interest rate is...

    If the bond sells for more than the bond face amount the stated interest rate is more or less than market?

  • Seaside issues a bond that has a stated interest rate of 7%, face amount of $40,000,...

    Seaside issues a bond that has a stated interest rate of 7%, face amount of $40,000, and is due in 8 years. Interest payments are made semi-annually. The market rate for this type of bond is 8%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $65,276. $37,669. $61,356. $40,000.

  • Seaside issues a bond that has a stated interest rate of 10%, face amount of $50,000,...

    Seaside issues a bond that has a stated interest rate of 10%, face amount of $50,000, and is due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $83,920. $46,320. $53,605. $50,000.

  • 22 Seaside issues a bond that has a stated interest rate of 9%, face amount of...

    22 Seaside issues a bond that has a stated interest rate of 9%, face amount of $40,000, and is due in 8 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $55,746. $33,937. $40,000. $60,786.

  • 21- Seaside issues a bond that has a stated interest rate of 8%, face amount of...

    21- Seaside issues a bond that has a stated interest rate of 8%, face amount of $50,000, and is due in 6 years. Interest payments are made semi-annually. The market rate for this type of bond is 10%. What is the issue price of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $45,569. $82,802. $77,842. $50,000.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT