If a bond's stated interest rate is higher than the market rate,which of the following is TRUE?
A) The bond will be issued at a premium.
B) The bond will be issued at par.
C) The bond will be issued at a discount.
D) The bond will be issued for an amount lower than the maturity value.

Question

Quizplus · Accepted Answer

When a bond's stated interest rate is higher than the market rate, it is more attractive to investors because it offers a higher return than what is currently available in the market. Therefore, investors are willing to pay more than the face value of the bond, leading to the bond being issued at a premium.

If a Bond's Stated Interest Rate Is Higher Than the Market