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Which of the following occurs when a bond's stated interest rate is higher than the market interest rate?

1. The bond will be issued at a premium.
2. The bond will be issued at maturity value.
3. The bond will be issued at a discount.
4. The bond will be issued at par.

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Answer:

a .

Step-by-Step explanation

Option A is the correct answer.

When the bond's stated interest rate is higher than the market interest rate then the bond shall be issued at a premium.

As the issuer of the bond shall pay a higher interest rate as compared to the market , therefore the bond shall be issued at a premium.

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