When bonds are issued at a premium:
A)interest expense on the bonds will be less than the interest paid.
B)interest expense on the bonds will be more than the interest paid.
C)the bonds are sold for less than their face amount.
D)the coupon interest rate is less than the market interest rate.

Question

Quizplus · Accepted Answer

When bonds are issued at a premium, the interest expense is less than the interest paid because the premium reduces the effective interest cost over the life of the bond.

When Bonds Are Issued at a Premium