Question

Your company is planning to issue $1,000 bonds with a stated interest rate of 7% and a maturity date of July 15, 2022. If interest rates rise in the economy so that similar financial investments pay 9%, your company will:

A) not be able to issue the bonds because no one will buy them.

B) receive a higher issue price to compensate buyers for the lower stated interest rate.

C) have to accept a lower issue price to attract buyers.

D) have to reprint the bond certificates to change the stated interest rate to 9%.

Answer

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