Question

If bonds are issued at a premium, the stated interest rate is a.higher than the market rate of interest b.too low to attract investors c.lower than the market rate of interest d.adjusted to a higher rate of interest

Answer 1

Answer:

a.higher than the market rate of interest

Explanation:

If bonds are issued at a premium, the stated interest rate is higher than the market rate of interest.

- If the company issues the binds at a premium, it means that the company is getting more money than the face value of the bond.

- This happens because the demand for the bind is high in the market.

- The demand is high because the company offers higher interest rate as compared to market interest rate.

- If the bonds are issued at a discount, then the stated interest rate is lower than the market interest rate.