What occurs when a bond is issued at par?

When a bond is issued at par, it means that the bond is sold for its face value, which signifies that the amount paid by the investor for the bond is equal to its nominal value. This situation occurs when the market rate of interest for similar bonds is equal to the stated rate of the bond.

In this scenario, since the market rate matches the stated rate, there is no incentive for investors to pay more or less than the face value. Investors perceive the returns they will receive from the bond to be equal to their expectations based on current market conditions. Therefore, this equivalence results in the bond being issued at its par value, reflecting a balance between supply and demand in the bond market.

The other options describe conditions where bonds would be issued either at a premium or at a discount, indicating a disparity between the market rate and the stated rate.