The Cases Company Issues $800 000 of 7%, 10- Year

Multiple Choice

The Cases Company issues $800 000 of 7%, 10- year debentures on 31 March 2013. The debenture pays interest on 31 March and 30 September. Which of the following statements is TRUE?

A) If the market rate of interest is 8%, the debentures will issue at par.
B) If the market rate of interest is 8%, the debentures will issue at a discount.
C) If the market rate of interest is 8%, the debentures will issue above par.
D) If the market rate of interest is 8%, the debentures will issue at a premium.