Question: 1. When the contract rate is above the market rate, do bonds sell at a premium or a discount? Do purchasers pay more or less than the par value of the bonds?
2. Which of the following is true for an installment note requiring a series of equal total cash payments?
(a) Payments consist of increasing interest and decreasing principal;
(b) payments consist of changing amounts of principal but constant interest; or
(c) payments consist of decreasing interest and increasing principal.