If an investor owns a bond that pays a higher rate of interest than other bonds of similar risk, the investor should be able to sell the bond on the secondary market for more than its face value.

Question

Quizplus · Accepted Answer

If an investor owns a bond that is highly valued by other investors, the laws of supply and demand will cause the price of that bond to be bid upwards. Bonds sold above their face value are sold at a premium.

If an Investor Owns a Bond That Pays a Higher