Asked by
Mbalentle Futshane
on Oct 15, 2024
Verified
When a bond sells at a premium:
A) The contract rate is above the market rate.
B) The contract rate is equal to the market rate.
C) The contract rate is below the market rate.
D) It means that the bond is a zero coupon bond.
E) The bond pays no interest.
Market Rate
The current price or cost of a good, service, or financial instrument in the marketplace.
Contract Rate
The agreed-upon rate specified in a contract for services to be performed or for goods to be supplied.
Premium
The amount paid for an insurance policy or an amount paid over the face value of bonds.
- Develop comprehension of the structure and implications of bond pricing, which involves the consideration of discounts, premiums, and various amortization methods.
Verified Answer
MM
Learning Objectives
- Develop comprehension of the structure and implications of bond pricing, which involves the consideration of discounts, premiums, and various amortization methods.