Which of the following statements is TRUE about a bond that is issued at a premium?
A) It will be sold above par.
B) Its interest rate lower than the prevailing market rate.
C) It will repay principal at more than the face value.
D) It will be sold at par.

Question

Quizplus · Accepted Answer

A bond that is issued at a premium means that it is sold above its par value, so option A is true. Option B is incorrect because a bond issued at a premium will have a higher interest rate than the prevailing market rate. Option C is incorrect because the principal will be repaid at the face value, not more than that. Option D is also incorrect since the bond is issued at a premium and not at par.

Which of the Following Statements Is TRUE About a Bond