Asked by
Bianca Carabio
on Nov 13, 2024
Verified
Bonds are sold at face value when the contract rate is equal to the market rate of interest.
Contract Rate
The periodic interest to be paid on the bonds that is identified in the bond indenture; expressed as a percentage of the face amount of the bond.
Market Rate
The current price in the marketplace at which an asset can be bought or sold.
Face Value
The nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate, representing its value at issuance.
- Acquire knowledge on the link between interest rates in the financial market and the pricing of bonds.
Verified Answer
CL
Learning Objectives
- Acquire knowledge on the link between interest rates in the financial market and the pricing of bonds.