If the market rate exceeds the stated interest rate,a bond will sell at a premium.

Question

Quizplus · Accepted Answer

If the market rate exceeds the stated interest rate, a bond will sell at a discount. When interest rates increase, the value of already issued bonds decreases because newer bonds offer higher returns. This means investors will only buy existing bonds if they are available at a discounted price, hence selling at a premium would not occur.

If the Market Rate Exceeds the Stated Interest Rate,a Bond