In a bond indenture dated January 1, 2019, Pink Company authorized the issuance of $500,000 face value,

Question:

In a bond indenture dated January 1, 2019, Pink Company authorized the issuance of $500,000 face value, 10 percent, 20-year bonds payable. No bonds were issued until July 1, 2020, when bonds with a face value of $200,000 were issued. At that time, the market rate of interest on similar debt was 9 percent. Would the issue price of the bonds be more than or less than face value? Explain.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...