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On January 1, Boston Enterprises issues bonds that have a $1,700,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. [True/False]
On January 1, Boston Enterprises issues bonds that have a $1,700,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. [True/False]
Final answer:The statement is True. The bonds are sold at par, which means they are issued and sold for their face value.Explanation:The statement is True. The bonds are sold at par, which means they are issued and sold for their face value. In this case, the par value of the bonds is $1,700,000. This means that investors who purchase these bonds will pay the full $1,700,000 to Boston Enterprises. The subject of the question pertains to the issuance of bonds by a company, a common topic in business finance. Companies issue bonds to raise capital from investors, offering regular interest payments, and the return of the principal amount upon maturity. Bonds are sold at par value when the bond's price is equal to the face value of the bond. When interest rates go up after the bond is issued, the attractiveness of the bond decreases, which generally causes the market price of the bond to drop below its face value....