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On January 1, 2015, Brightstar Inc. issued $1,000,000 of 8%, semiannual 3-year coupon bonds. 2) The...

On January 1, 2015, Brightstar Inc. issued $1,000,000 of 8%, semiannual 3-year coupon bonds.

2) The market interest rate on January 1, 2015 was 8%. Was the bond issued at par, a premium, or a discount?  

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Answer #1

When , the  coupon rate is equal to  the market rate then bonds are issued at Par. Here the semi annual coupon rate on bonds payable is 8% and also the market rate of interest is 8%. So, if an investor invests his fund to the given bond or any other market investment options, then in both the cases, the return on investment would be same. So, from the issuance of bonds , the issuing company gets the face amount of the bonds payable.

For further knowledge reference :

Coupon rate = Market interest rate Issued at Par
Coupon rate > Market interest rate Issued at Premium
Coupon rate < Market interest rate Issued at discount

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