When a bond sells at more than its face amount,the market rate of interest is ________.
A)equal to the bond's stated rate of interest
B)greater than the bond's stated rate of interest
C)less than the bond's stated rate of interest
D)irrelevant to investors

Question

Quizplus · Accepted Answer

When a bond sells for more than its face amount (at a premium), it indicates that the market rate of interest is less than the bond's stated rate of interest. Investors are willing to pay more for the bond because it offers a higher return than the prevailing market rates.

When a Bond Sells at More Than Its Face Amount,the