If a bond is trading at 103 the:
A)the interest expense is greater than the interest payment
B)the interest expense is less than the interest payment
C)the interest expense is equal to the interest payment
D)the interest expense can not be determined

Question

Quizplus · Accepted Answer

When a bond is trading at 103, it means that the market value of the bond is 103% of its face value or par value. This indicates that the interest rate on the bond is lower than the prevailing market interest rate. Therefore, the interest expense (which is the coupon payment multiplied by the face value) will be greater than the interest payment. So, choice B is correct.

If a Bond Is Trading at 103 The