Read each statement? below, indicate if it is true or? false, and give a brief e

Question

Read each statement? below, indicate if it is true or? false, and give a brief explanation of your answer.

When a bond is sold at a discount, the maturity value is less than the present value of the principal and Interest payments, based on the market rate of interest on the date ot issue. O A. OB. 0 C, 0 D. the market rate of Interest is lower than the contract (stated) rate. the market rate of interest is higher than the contract (stated) rate. the maturity value is less than the present value of the principal and interest payments, based onthe contract (stated) rate. the maturity value ls greater than the present value of future cash flows, which Is why the bond was issued at a discount.

Explanation / Answer

False, the maturity value is greater than the present value of future cash flows, which is why the bond was issued at a discount.

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