Problem:
On December 31, IOU Corporation issued $100,000 of 10-year bonds at 98. The bonds pay interest annually on Decemebr 31. These bonds sold at 98 because____?
- The stated interest rate was higher than the market rate of interest
- The stated interest rate was lower than the market rate of interest
- The bond was issued six months after year end
- This is an installment note
Note: Please describe comprehensively and provide step by step solution.