When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:

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Academy of PakistanTest & Learning

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239FinanceMedium

ADiscount

BPremium

CPar

DCannot be determined without more information

Correct answer

B. Premium

Explanation

If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates..

When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at: - Answer and Explanation | Academy of Pakistan