When bonds are issued at a premium which means bonds are issued at more than their par value. This premium amount is amortized over the life of the bond and at the end of the life bond will be equal to the face value.
A bond that's trading at a premium means that its price is trading at a premium or higher than the face value of the bond. For example, a bond that was issued at a face value of $1,000 might trade at $1,050 or a $50 premium. Even though the bond has yet to reach maturity, it can trade in the secondary market. In other words, investors can buy and sell a 10-year bond before the bond matures in ten years. If the bond is held until maturity, the investor receives the face value amount or $1,000 as in our example above.
A premium bond is a bond trading above its face value or costs more than the face amount on the bond.
A bond might trade at a premium because its interest rate is higher than the current market interest rates.
The company's credit rating and the bond's credit rating can also push the bond's price higher.
Investors are willing to pay more for a creditworthy bond from the financially viable issuer.
Learn more about bonds here
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Answer:
$45; $50
Explanation:
Given that,
Quantity sold (at price = $50 per bottle) = 10 bottles of champagne
Quantity sold (at price = $45 per bottle) = 11 bottles of champagne
Therefore,
Quantity effect (keeping the price unchanged):
= (11 - 10) × $45
= $45
Price effect (keeping the quantity unchanged):
= ($45 - $50) × 10
= - $50
Hence, total revenue experiences an increase of $45 and a decrease of $50.
<span>Sale Proceeds of Mutual Funds = 100 Shares * $12.03 = $1203
Add: Dividend Earned on shares = 100 Shares * $0.75= $75
Less: Purchase cost of shares = 100 Shares * $10 = $1000
Less: Exit fees = $1203*5.5% = $66.17
Net Income from Investment = $211.83
Earning in %= $211.83 / $1000 = 21.18%</span>
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