Which of the following occurs when a bond's stated interest rate is higher than the market interest rate?
A) The bond will be issued at a premium.
B) The bond will be issued at maturity value.
C) The bond will be issued at a discount.
D) The bond will be issued at par.

Question

Quizplus · Accepted Answer

When a bond's stated interest rate is higher than the market interest rate, it means the bond will pay more interest than what is currently available in the market. Therefore, investors are willing to pay more than the face value of the bond to acquire it, resulting in the bond being issued at a premium.

Which of the Following Occurs When a Bond's Stated Interest