Which of the following statements is true of a bond that is issued at a premium?
A)It will be sold above par.
B)Its stated interest rate is lower than the prevailing market rate.
C)It will repay a greater amount than the face value at maturity.
D)It will be sold at par.

Question

Quizplus · Accepted Answer

A bond that is issued at a premium means that it is sold above its face value or par value. This is because the bond's stated interest rate is higher than the prevailing market rate, making it more attractive to investors. As a result, investors are willing to pay more for the bond, hence the premium.

Which of the Following Statements Is True of a Bond