Asked by
Keshav Agarwal
on Nov 18, 2024
Verified
If the market rate of interest is greater than the contractual rate of interest, bonds will sell
A) at a premium
B) at face value
C) at a discount
D) only after the stated rate of interest is increased
Market Rate
The prevailing interest rate available in the marketplace for loans or investments of similar risk and maturity.
Contractual Rate
The interest rate stated in a contract, such as in a loan agreement or bond indenture, determining the amount of interest payments.
- Determine the market dynamics affecting bond prices, including interest rates.
Verified Answer
KT
Learning Objectives
- Determine the market dynamics affecting bond prices, including interest rates.