Given the information below,which bond(s)will be issued at a premium?
$$\begin{array} { | l | c | c | c | c | }
\hline & \text { Bond 1 } & \text { Bond 2 } & \text { Bond 3 } & \text { Bond 4 } \
\hline \text { Stated Rate of Return } & 7 \% & 12 \% & 10 \% & 8 \% \
\hline \text { Market Rate of Return } & 8 \% & 10 \% & 10 \% & 9 \% \
\hline
\end{array}$$

Question

Given the information below,which bond(s)will be issued at a premium?
$$\begin{array} { | l | c | c | c | c | } 
\hline & \text { Bond 1 } & \text { Bond 2 } & \text { Bond 3 } & \text { Bond 4 } \
\hline \text { Stated Rate of Return } & 7 \% & 12 \% & 10 \% & 8 \% \
\hline \text { Market Rate of Return } & 8 \% & 10 \% & 10 \% & 9 \% \
\hline
\end{array}$$

Quizplus · Accepted Answer

A bond is issued at a premium when its stated rate of return is higher than the market rate of return. Bond 2 has a stated rate of 12% and a market rate of 10%, so it will be issued at a premium.

Given the Information Below,which Bond(s)will Be Issued at a Premium