Question

If bonds with a face value of $ 206 comma 000are issued at 109​,the amount of cash proceeds is​ ________.

Answer 1

The cash proceeds is $224,540

Step-by-step explanation:

The implication is that the bonds were issued at a premium. A bond issued at a premium is issued above its par value. This means that investors pay more than the face value for investing in the bonds. They are usually compensated with higher interest rates.

Bonds can also be issued at a discount. This happens when the issue price is less than the par value. The par value is the face value or nominal value. Bonds can be issued at a discount when the interest rate is lower than the yield rate.