The proceeds received from a bond issue will be greater than the bond maturity value when the coupon rate exceeds the market rate of interest.

Question

Quizplus · Accepted Answer

When the coupon rate is higher than the market rate, the bond becomes more attractive to investors, leading to a higher demand for the bond. This increased demand pushes up the bond's price, resulting in the proceeds received from the bond issue being greater than the bond's maturity value.

The Proceeds Received from a Bond Issue Will Be Greater