1. Which interest rate, the face rate or the market rate, should be used when calculating the issue price of a bond? Why? 2. What is the tax advantage that companies experience when bonds are issued...

1. Which interest rate, the face rate or the market rate, should be used when calculating the issue price of a bond? Why?

2. What is the tax advantage that companies experience when bonds are issued instead of stock?

3. Does the issuance of bonds at a premium indicate that the face rate is higher or lower than the market rate of interest?