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A bond issue with a face amount of $493,000 bears interest at the rate of 7%....

A bond issue with a face amount of $493,000 bears interest at the rate of 7%. The current market rate of interest is 8%. These bonds will sell at a price that is:

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Answer #1

Coupon rate is 7% but market rate is 8%.

When market rate is greater than coupon rate then bonds sell at discount.

In the given case bonds will sell for less than 493,000

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