A $500,000 Bond Issue Sold at 98

A $500,000 bond issue sold at 98. Therefore, the bonds:

A) Sold at a discount because the stated rate of interest was lower than the effective rate.
B) Sold for the $500,000 face amount less $10,000 of accrued interest.
C) Sold at a premium because the stated rate of interest was higher than the yield rate.
D) Sold at a discount because the effective interest rate was lower than the face rate.

Correct Answer:

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