Bonds are issued at greater than par value when
A)the bonds are risk free.
B)the market interest rate is less than the stated interest rate on the bond.
C)the market rate of interest is declining.
D)the market interest rate is greater than the stated interest rate on the bond.
E)the market interest rate equals the stated interest rate on the bond.

Question

Quizplus · Accepted Answer

Bonds are issued at a premium (greater than par value) when the stated interest rate on the bond is higher than the prevailing market interest rate. This makes the bond more attractive to investors, as it offers a higher return than what is currently available in the market.

Bonds Are Issued at Greater Than Par Value When