If the Entity Is Offering a Higher Interest Rate on Debentures

Multiple Choice

If the entity is offering a higher interest rate on debentures than the market believes is appropriate,the market will:

A) Be prepared to pay more than the par value of the debentures, offering a discount.
B) Be prepared to pay less than the par value of the debentures, offering a discount.
C) Be prepared to pay more than the par value of the debentures, offering a premium.
D) Be prepared to pay less than the par value of the debentures, offering a premium.
E) None of the given answers.