When the contract rate on a bond issue is less than the market rate,the bonds sell at a premium.

Name: When the contract rate on a bond issue is less than the market rate,the bonds sell at a premium.
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When the contract rate (or coupon rate) on a bond issue is less than the market rate, the bonds sell at a discount, not a premium, because their lower interest payments are less attractive to investors compared to the prevailing market rates.

When the Contract Rate on a Bond Issue Is Less