Question

On Jan 2018, your company issued a $1,000,000, 8% payable annually, 5 year, bond when the...

On Jan 2018, your company issued a $1,000,000, 8% payable annually, 5 year, bond when the market rate was 10%. Did your company issue its bond on Jan 1, 2018 at a premium or discount?

Select one:

a. neither at a premium nor at a discount

b. at par value

c. at a premium

d. at a discount

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Answer #1

When a bond is issued at a lower price than its par value or a at a price lower than secondary market then it is said to be issued at discount. So , ans is d. At discount

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