# In each of the following situations, indicate whether the bonds would be sold at the face amount,

## Question:

In each of the following situations, indicate whether the bonds would be sold at the face amount, at a premium, or at a discount:

a. A $1,000 bond with 20-year maturity. Interest coupons attached, each in the amount of $120, are payable annually. The market rate of interest is 14 percent, compounded annually.

b. A $1,000 bond with ten-year maturity. Interest coupons attached, each in the amount of $140, are payable at 12-month intervals. The market rate of interest is 14 percent, compounded annually.

c. A $1,000 bond due in five years. Interest coupons attached, each in the amount of $150, are payable annually. The market rate of interest is 14 percent, compounded annually.

## Step by Step Answer:

**Related Book For**

## An Introduction To Accounting And Managerial Finance A Merger Of Equals

**ISBN:** 9789814273824

1st Edition

**Authors:** Harold JR Bierman