If Bonds Are Issued at a Discount, It Means That

question 131

Multiple Choice

If bonds are issued at a discount, it means that the

• A) financial strength of the issuer is suspect.
• B) market interest rate is higher than the contractual interest rate.
• C) market interest rate is lower than the contractual interest rate.
• D) bondholder will receive effectively less interest than the contractual rate of interest.

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Definitions:

Deafness

The partial or total inability to hear, which can result from various causes, impacting communication and sometimes balance.

Olfactory Bulbs

Structures located in the forebrain involved in the sense of smell, processing odors detected by nasal receptors.

Limbic System

In humans, functional association of various brain centers, including the amygdala and hippocampus; governs learning and memory and various emotions such as pleasure, fear, and happiness.

Pons

Portion of the brain stem above the medulla oblongata and below the midbrain; assists the medulla oblongata in regulating the breathing rate.