If an issuer sells bonds at a date other than an interest payment date:
A)This means the bonds sell at a premium.
B)This means the bonds sell at a discount.
C)The issuing company will report a loss on the sale of the bonds.
D)The issuing company will report a gain on the sale of the bonds.
E)The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.

Question

Quizplus · Accepted Answer

If the issuer sells bonds at a date other than an interest payment date, the buyers will normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date. This is known as accrued interest and is added to the purchase price of the bonds. Therefore, the bonds do not sell at a premium or a discount, and the issuing company will not report a gain or a loss on the sale.

If an Issuer Sells Bonds at a Date Other Than