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Roy Torres
Business
20 February, 00:50
Selling the bonds at a premium has the effect of
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Hailie Bright
20 February, 01:10
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Answer: Selling the bonds at a premium has the effect of causing the cost of borrowing money to be lower than the bond when interest is paid.
Explanation: When a bond is traded above the par value, it is being sold at premium. Since the bond is sold above it, the interest rate is higher but the cost to borrow money is lower. Purchasing a bond a premium is expensive because it is above market value but selling a bond at premium contributes to more money made off of the sale.
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