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. have to reprint the bond certificates to change the stated interest rate to 9%.
B. have to accept a lower issue price to attract buyers.
C. not be able to issue the bonds because no one will buy them.
D. receive a higher issue price to compensate buyers for the lower stated interest rate.
Answer: B
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a. 200 to 450
b. 150 to 240
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