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Describes what happens when bonds are issued

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Reference no: EM132496017

Question 1: Which of the following describes what happens when bonds are issued when the market interest rate is less than the stated interest rate?

Multiple Choice

  1. The bonds are issued at less than their face value.
  2. It raises the effective interest rate above the stated rate of interest. 
  3. The bonds are issued at a premium. 
  4. The bonds are issued at a premium and the effective interest rate is higher than the stated rate.

Reference no: EM132496017

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