When a bond is purchased in the secondary bond market at a discount, the amount of discount treated as interest income when the bond is sold prior to maturity is the:

Question

Quizplus · Accepted Answer

When a bond is purchased in the secondary bond market at a discount, the amount of discount treated as interest income when the bond is sold prior to maturity is the accrued market discount. The accrued market premium refers to the amount of premium on a bond that has accrued since the last interest payment, and therefore does not apply in this scenario. Option A and B are incorrect because they refer to premium rather than discount, and option E is incorrect because one of the choices must be correct.

When a Bond Is Purchased in the Secondary Bond Market