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8 April, 02:17

Which of the following statements is true of a bond that is issued at a premium?

A. At maturity, the bond will repay an amount that is greater than the face value.

B. The bond will be issued at par.

C. The stated interest rate is lower than the prevailing market interest rate.

D. The bond will be issued at an amount above face value

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  1. 8 April, 05:39
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    D. The bond will be issued at an amount above face value

    Explanation:

    A premium bond trades at a price above its face value. For example, if the face value of a bond is $5000, but it is selling at a price above $5000, then it is a premium bond. At maturity, a bond bought at a premium will be paid the face value and not the premium value.

    Bond's interest rates are constant until maturity. Demand for a particular bond may drive its price higher. If investors expect the interest returns from the bond to be higher than the market interest payments, such a bond will trade at a premium.

    The bond that sells at a lower price than the face value is discount bond.
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Home » Business » Which of the following statements is true of a bond that is issued at a premium? A. At maturity, the bond will repay an amount that is greater than the face value. B. The bond will be issued at par. C.
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