If a bond is issued at 101,the coupon rate was:

Name: If a bond is issued at 101,the coupon rate was:
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Question

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When a bond is issued at a price higher than the face value, it means the effective yield of the bond is lower than its coupon rate. This indicates that the coupon rate is higher than the prevailing market rate of interest, otherwise investors would not be willing to pay more than the face value. Therefore, the correct answer is A - higher than the market rate of interest.

If a Bond Is Issued at 101,the Coupon Rate Was