Bonds are sold at a premium if the
A)issuing company has a better reputation than other companies in the same business.
B)market rate of interest was less than the face rate at the time of issue.
C)market rate of interest was more than the face rate at the time of issue.
D)company will have to pay a premium to retire the bonds.

Question

Quizplus · Accepted Answer

Bonds are sold at a premium when the market rate of interest is less than the face rate at the time of issue. This means that investors are willing to pay more for a bond that offers a higher interest rate than what they can currently get in the market, resulting in the bond being sold at a premium.

Bonds Are Sold at a Premium If the