If the Entity Is Offering a Higher Interest Rate on Debentures

question 24

Multiple Choice

If the entity is offering a higher interest rate on debentures than the market believes is appropriate,the market will:

• A) Be prepared to pay more than the par value of the debentures, offering a discount.
• B) Be prepared to pay less than the par value of the debentures, offering a discount.
• C) Be prepared to pay more than the par value of the debentures, offering a premium.
• D) Be prepared to pay less than the par value of the debentures, offering a premium.
• E) None of the given answers.

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