D is corrent. Bonds generally provide for periodic fixed interest payments at a stated rate of interest. At issuance, the market (yield) rate of interest for the particular bond may be above, the same as, or below the stated rate. When the market (yield) rate of interest is higher than the stated rate, the bond will sell for less than its par value (as in this case). By selling the bond for less, the effective interest rate will equal the market (yield) rate.
A is incorrect. Bonds generally provide for periodic fixed interest payments at a stated rate of interest. At issuance, the market (yield) rate of interest for the particular bond may be above, the same as, or below the stated rate. When the market (yield) rate of interest is higher than the stated rate, the bond will sell for less than its par value (as in this case). By selling the bond for less, the effective interest rate will equal the market (yield) rate.
A is incorrect. Bonds generally provide for periodic fixed interest payments at a stated rate of interest. At issuance, the market (yield) rate of interest for the particular bond may be above, the same as, or below the stated rate. When the market (yield) rate of interest is higher than the stated rate, the bond will sell for less than its par value (as in this case). By selling the bond for less, the effective interest rate will equal the market (yield) rate.
A is incorrect. Bonds generally provide for periodic fixed interest payments at a stated rate of interest. At issuance, the market (yield) rate of interest for the particular bond may be above, the same as, or below the stated rate. When the market (yield) rate of interest is higher than the stated rate, the bond will sell for less than its par value (as in this case). By selling the bond for less, the effective interest rate will equal the market (yield) rate.
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