Bonds issued at a discount are much more common than bonds issued at a premium, since few companies issue their bonds to pay cash interest above the market interest rate.

Question

Quizplus · Accepted Answer

This statement is generally true. Bonds issued at a discount occur when the stated interest rate is lower than the prevailing market interest rate, and therefore the bond is sold for less than its face value. This is more common than bonds issued at a premium, where the stated interest rate is higher than the market interest rate and the bond is sold for more than its face value. Since companies want to attract investors by offering competitive interest rates, it is unlikely that many bonds would be issued at a premium.

Bonds Issued at a Discount Are Much More Common Than