If the market interest rate at the date of a bond issue is greater than the coupon interest rate, the bond will be issued at a premium.

Question

Quizplus · Accepted Answer

When the market interest rate exceeds the coupon rate, the bond is issued at a discount because its fixed interest payments are less attractive compared to the prevailing market rates, making it necessary to sell the bond for less than its face value to attract buyers.

If the Market Interest Rate at the Date of a Bond