Question

In each of the following situations, state whether the bonds will sell at a premium or discount:
a. Addy issued $400,000 of bonds with a stated interest rate of 7 percent. At the time of issue, the market rate of interest for similar investments was 6 percent.
b. Rigsby issued $200,000 of bonds with a stated interest rate of 6 percent. At the time of issue, the market rate of interest for similar investments was 8 percent.
c. Sanders Inc., issued callable bonds with a stated interest rate of 6 percent. The bonds were callable at 102. At the date of issue, the market rate of interest was 7 percent for similar investments.



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  • CreatedOctober 26, 2013
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