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Bond Issuance at Face Value

When Coupon Rate Equals Market Rate

When the stated interest rate equals the market interest rate, investors are willing to pay exactly the face value of the bonds. No premium or discount exists because the coupon payments provide a market return.

  • Issue price equals face value.
  • No premium or discount recorded.
  • Carrying amount remains equal to face value until maturity.
  • Interest expense equals cash interest paid.
Summary
Bonds are issued at par when the stated interest rate matches the market rate.