Mars Corp. issued ten-year bonds with a maturity value of $ 400,000. If the bonds were issued at a premium, this indicates that
A) the market rate was higher than the stated rate.
B) the stated rate was higher than the market rate.
C) the market and stated rates were the same.
D) no relationship exists between the two rates.

Question

Quizplus · Accepted Answer

If the bonds were issued at a premium, it means that the market rate (which is the rate that investors demand) is lower than the stated rate (which is the rate that is printed on the bond). Investors are willing to pay more for the bond because the stated rate is higher than what they could get elsewhere in the market.

Mars Corp Issued Ten-Year Bonds with a Maturity Value of