If the stated rate of interest is
A) equal to the market rate, the bond will sell at a discount.
B) equal to the market rate, the bond will sell at a premium.
C) greater than the market rate, the bond will sell at a discount.
D) greater than the market rate, the bond will sell at a premium.
E) less than the market rate, the bond will sell at a premium.

Question

Quizplus · Accepted Answer

When the stated rate of interest on a bond is greater than the market rate, investors are willing to pay more for the bond because it offers a higher return than what is currently available in the market, hence it sells at a premium.

If the Stated Rate of Interest Is