To determine which bond(s) will be issued at a discount, we need to compare the stated rate of return for each bond to the corresponding market rate of return. A bond is issued at a discount if its stated rate of return is less than the market rate of return.
Let's analyze each bond step-by-step:
1. Bond 1:
- Stated Rate: 1096
- Market Rate: 1296
- Comparison: 1096 < 1296
- Conclusion: Bond 1 will be issued at a discount.
2. Bond 2:
- Stated Rate: 896
- Market Rate: 896
- Comparison: 896 = 896
- Conclusion: Bond 2 will not be issued at a discount (since the stated rate is equal to the market rate).
3. Bond 3:
- Stated Rate: 1296
- Market Rate: 1596
- Comparison: 1296 < 1596
- Conclusion: Bond 3 will be issued at a discount.
4. Bond 4:
- Stated Rate: 1296
- Market Rate: 1096
- Comparison: 1296 > 1096
- Conclusion: Bond 4 will not be issued at a discount (since the stated rate is higher than the market rate).
Based on these comparisons, we find that Bond 1 and Bond 3 are issued at a discount.
Answer:
Bonds 1 and 3
