If a bond is purchased at a premium, which of the following is true?
A)The coupon rate is greater than the market rate.
B)The coupon rate is less than the market rate.
C)The bond will pay less annual interest now than when it was originally issued.
D)The par value is equal to the present value.
E)The bond will pay semi-annual payments.

Question

Quizplus · Accepted Answer

If a bond is purchased at a premium, this means that the price paid for the bond is greater than its par value. This could occur if the coupon rate (the interest rate paid by the bond) is higher than the current market rate for similar bonds. Therefore, choice A is correct as the coupon rate would be greater than the market rate in this scenario.

If a Bond Is Purchased at a Premium, Which of the Following