Metropolitan Nashville and Davidson County issues $25 million of municipal bonds to finance a new domed stadium

Question:

Metropolitan Nashville and Davidson County issues $25 million of municipal bonds to finance a new domed stadium for the Tennessee Titans. The bonds have a face value of $10,000 each, are somewhat risky, and mature in 20 years. Enterprise Bank of Nashville buys one of the bonds using funds deposited by Sarah Levien and Ted Hawkins, who each purchased a 6-month, $5,000 certificate of deposit. Explain the intermediation services provided by Enterprise Bank in this transaction. Illustrate with T-accounts.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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