A bond issue of $500,000 sold at 107 has a bond premium of $35,000.

Question

Quizplus · Accepted Answer

The bond premium is the amount that the bond is sold for above its face value. In this case, the bond issue sold at 107, which means it was sold for $107 for every $100 of face value. To calculate the actual amount sold, we take the issue size ($500,000) and multiply it by the selling price (107% or 1.07):

$500,000 * 1.07 = $535,000

The bond premium is then calculated by subtracting the face value from the amount sold:

$535,000 - $500,000 = $35,000

Therefore, the bond issue of $500,000 sold at 107 has a bond premium of $35,000.

A Bond Issue of $500,000 Sold at 107 Has a Bond