A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The current market rate of interest is also 10%

A bond issue with a face amount of $500,000 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:

A) Equal to $500,000.

B) More than $500,000.

C) Less than $500,000.

D) The answer cannot be determined from the information provided.

Answer: A

Convertible bonds:

A) Provide potential benefits only to the issuer.

B) Provide potential benefits only to the investor.

C) Provide potential benefits to both the issuer and the investor.

D) Provide no potential benefits.

Answer: C

For a bond issue that sells for more than the bond face amount, the stated interest rate is:

A) The actual yield rates.

B) The prime rate.

C) More than the market rate.

D) Less than the market rate.

Answer: C