If Bonds Are Issued at a Discount, It Means That

question 110

Multiple Choice

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

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

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Definitions:

Horizontal

Relating to the expansion or operation across the same level or stage in the supply chain, industry, or market, often involving partnerships or mergers.

Vertical

Pertains to a market or industry structure where the production process, from raw materials to final product delivery, is integrated within a single company or closely controlled through a chain of ownership.

Wholesaler

A wholesaler is a person or company that sells goods in large quantities at lower prices to retailers, rather than selling them directly to consumers.

Retailer

A business or person that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their goods to another business.