The correct answer is: A. at par value.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). The borrower issues bonds to raise money and agrees to pay the bond holders a fixed interest rate for a specified period of time, known as the maturity date.
The coupon rate is the interest rate that the bond issuer pays to the bond holders. The going rate of interest is the current market interest rate for similar bonds. If the coupon rate is equal to the going rate of interest, then the bond will be sold at par value. This is because the bond will be offering investors a competitive interest rate, and there will be no incentive for investors to buy the bond at a premium or sell it at a discount.
Here is a brief explanation of each option:
- Option A: at par value. This is the most likely outcome if the coupon rate is equal to the going rate of interest. The bond will be sold at its face value, which is the amount that the borrower agrees to repay the investor at maturity.
- Option B: below its par value. This could happen if the bond is perceived as being risky, or if the going rate of interest has increased since the bond was issued. In this case, investors would be willing to pay less than the face value of the bond in order to compensate for the risk or the lower interest rate.
- Option C: more than its par value. This could happen if the bond is perceived as being safe, or if the going rate of interest has decreased since the bond was issued. In this case, investors would be willing to pay more than the face value of the bond in order to obtain a higher interest rate.
- Option D: seasoned par value. This is a term used to describe the price of a bond after it has been issued and has been trading on the secondary market for some time. The seasoned par value of a bond is typically close to its par value, but it can fluctuate depending on market conditions.