On January$1,$

$20252025,$

EducatorsEducators

Credit Union

$($ECUECU$)$

issued

$88\%,$

$2020-$year

bonds payable with face value of

$ $700$ comma $000$$$700,000.$

The bonds pay interest on June $30$ and December $31.$

Read the requirements.

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Question content area bottom

Part $1$

Requirement $1.$ If the market interest rate is

$5\%5\%$

when

ECUECU

issues its$$ bonds, will the bonds be priced at face$$ value, at a$$ premium, or at a$$ discount? Explain.

The

$8\%8\%$

bonds issued when the market interest rate is

$5\%5\%$

will be priced at

$$

$$

a discount

a premium

face value

$.$

They are

$$

$$

attractive

unattractive

in this$$ market, so investors will pay

$$

$$

face value

less than face value

more than face value

to acquire them.

Part $2$

Requirement $2.$ If the market interest rate is

$9\%9\%$

when

ECUECU

issues its$$ bonds, will the bonds be priced at face$$ value, at a$$ premium, or at a$$ discount? Explain.

The

$8\%8\%$

bonds issued when the market interest rate is

$9\%9\%$

will be priced at

$$

$$

a discount

a premium

face value

$.$

They are

$$

$$

attractive

unattractive

in this$$ market, so investors will pay

$$

$$

face value

less than face value

more than face value

to acquire them.