When a company issues a bond at a premium:
A)the company is more profitable than most companies in its industry.
B)investors perceive the bond to be a very safe investment.
C)the company's interest expense will be less than the interest paid each year.
D)the company's interest expense will be more than the interest paid each year.

Question

Quizplus · Accepted Answer

When a bond is issued at a premium, it means the coupon rate is higher than the market rate, leading to interest expense being less than the interest paid.

When a Company Issues a Bond at a Premium