If bonds are issued at a premium, the stated interest rate is
A) higher than the market rate of interest
B) lower than the market rate of interest
C) too low to attract investors
D) adjusted to a higher rate of interest

Question

Quizplus · Accepted Answer

When bonds are issued at a premium, it means that the price paid for the bond is higher than the face value, resulting in a lower yield for the investor. The stated interest rate must be higher than the prevailing market rate of interest to make the bond more attractive to investors and justify the premium price.

If Bonds Are Issued at a Premium, the Stated Interest