Asked by Regan Mc Mullan on May 13, 2024
Verified
When a company issues bonds, the selling price of the bonds is determined by a number of factors.Two factors that affect bond prices are the bond's contract (stated)rate and its effective yield (effective rate).
Required:
Explain the effect on a bond's selling price caused by the stated and effective rates.
Bond Prices
The market price at which a bond is traded, reflecting various factors including interest rates, market demand, and the bond's credit quality.
- Gain insight into the core aspects of issuing bonds and the influence of distinct interest rates (contractual compared to market) on the value of bonds.
Verified Answer
CC
Chotirot ChuikrathokMay 17, 2024
Final Answer :
A bond may sell at one of three possible levels: at par, at a discount, or at a premium.The bases for these alternatives are as follows: 
Learning Objectives
- Gain insight into the core aspects of issuing bonds and the influence of distinct interest rates (contractual compared to market) on the value of bonds.