When the face rate of interest is higher than the market rate of interest on the date bonds are issued:
A)the proceeds from the issuance of the bonds are less than the face value of the bonds
B)the bonds are issued at a premium
C)the bonds are issued at a discount
D)both a and c are correct

Question

Quizplus · Accepted Answer

When the face rate of interest is higher than the market rate, bonds are issued at a premium because investors are willing to pay more for the higher interest payments.

When the Face Rate of Interest Is Higher Than the Market