Asked by Karina Garcia on Jun 07, 2024
Verified
A bond with face value $1,000 that sells for less than $1,000 in the market is called a:
A) Par bond.
B) Discount bond.
C) Premium bond.
D) Zero-coupon bond.
E) Floating rate bond.
Discount Bond
A bond that is sold for less than its face value.
Face Value
The nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate, representing its official worth or repayment value at maturity.
- Absorb the principles affecting the cost of bonds and their interrelation with market interest rates.
Verified Answer
KS
Kristy SchaeferJun 13, 2024
Final Answer :
B
Explanation :
A bond that sells for less than its face value is known as a discount bond. This typically occurs when the bond's interest rate is lower than the current market rate.
Learning Objectives
- Absorb the principles affecting the cost of bonds and their interrelation with market interest rates.