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8 July, 02:21

Which of the following statements is true if a bond's stated interest rate is higher than the market rate?

A. The bond will be issued at par.

B. The bond will be issued at a discount.

C. The bond will be issued at a premium.

D. The bond will be issued for an amount lower than the maturity value.

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Answers (1)
  1. 8 July, 02:50
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    Answer: The bond will be issued at a premium

    Explanation: If the interest rate on bond is higher than the market interest rate then the investors of such bond will get a greater benefit. Hence to get the greater benefit an investor must pay a higher value, thus, the bond will be issued at premium.

    Higher interest rate means the company will pay interest to investors mare than i the general rate in market, Therefore, company can charge investors more from a more valuable asset.

    Hence from the above we can conclude that the correct option is c.
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Home » Business » Which of the following statements is true if a bond's stated interest rate is higher than the market rate? A. The bond will be issued at par. B. The bond will be issued at a discount. C. The bond will be issued at a premium. D.
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