A bond issuing at 101.25 means that the bond

Question

Quizplus · Accepted Answer

When a bond is said to be issuing at 101.25, it means that the bond is selling for 101.25% of its face (par) value. Bonds are typically issued with a face value of $1,000, so if a bond is issued at 101.25, it is selling for 1.0125 times its face value.
To calculate the actual selling price of the bond, you would multiply the face value by the percentage:
Selling Price = Face Value x (Percentage / 100)
Selling Price = $1,000 x (101.25 / 100)
Selling Price = $1,000 x 1.0125
Selling Price = $1,012.50
Therefore, the correct answer is:
c. sold for $1,012.50.
This indicates that the bond was sold at a premium, as it was sold for more than its face value. This typically happens when the bond's stated interest rate is higher than the prevailing market rate of interest at the time of the sale.

A Bond Issuing at 101