When is interest expense more than interest paid?
A)when bonds are sold at a premium
B)when bonds are sold at par
C)when bonds are sold at a discount
D)when bonds are sold at a yield

Question

Quizplus · Accepted Answer

When bonds are sold at a discount, the stated interest rate is lower than the market rate. As a result, the effective interest rate is higher than the stated rate, which leads to higher interest expense than the actual interest paid.

When Is Interest Expense More Than Interest Paid