Q597
When price of bond is calculated below its par value, it is classified as
A.
classified bond
B.
discount bond
AnswerC.
compound bond
D.
consideration earning
Answer: Option B
Solution
Answer: Option B
Solution:
When price of bond is calculated below its par value, it is classified as discount bond. A discount bond is a bond that is issued for less than its par or face value. Discount bonds may also be a bond currently trading for less than its face value in the secondary market. A bond is considered a deep-discount bond if it is sold at a significantly lower price than par value, usually at 20% or more.