When selling bonds at a discount, the discount received effectively:

A) reduces the cost of borrowing.
B) increases the cost of borrowing.
C) does not affect the cost of borrowing.
D) increases the interest expense over that of bond sold at a premium.

Selling Bonds at a Discount

This occurs when bonds are sold for less than their face value, often due to the prevailing interest rates being higher than the bond's coupon rate.

Cost of Borrowing

The total amount that a borrower pays to secure and use borrowed funds, including interest and any associated fees.