Question

ABC Corp. issued $100,000 of bonds at a premium; as a result, the company: A. received more than $100,000. B. received less than $100,000. C. will pay the bondholders more money on the maturity date than it received on the issue date. D. received $100,000.

Answer 1

A

Step-by-step explanation:

If the yield to maturity is greater than the bonds coupon rate the bond is selling at a discount. Bond issuers would receive less than the face value of the bond as payment when the bond is sold

If the yield to maturity is less than the bonds coupon rate the bond is selling at a premium. Bond issuers would receive a greater sum than the face value of the bond as payment when the bond is sold

If a bond’s coupon rate is equal to its yield to maturity, then the bond is selling at par. Bond issuers would receive an amount equal to the face value of the bond as payment when the bond is sold