Which one of the following is the reason that bonds may sell at a discount or pr

Question

Which one of the following is the reason that bonds may sell at a discount or premium?

Select one:

A. The market yield rate fluctuated between the time the bond agreement was written and the date the bonds were actually issued to investors

B. Market conditions caused the coupon rate of interest to change between the time the bond agreement was written and the date the bonds were actually issued to investors

C. The bond issuer failed to consider the market yield rate when the bond agreement was created

D. The bond issuer adjusted the coupon rate to match that of other bond issues

Explanation / Answer

Solution: The market yield rate fluctuated between the time the bond agreement was written and the date the bonds were actually issued to investors

Explanation: Bonds can be sold for more and less than their par values because of fluctuation market interest rates

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