If a Bond's Stated Interest Rate Is Higher Than the Market

question 73

Multiple Choice

If a bond's stated interest rate is higher than the market rate, which of the following is true?

• A)The bond will be issued at a premium.
• B)The bond will be issued at par.
• C)The bond will be issued at a discount.
• D)The bond will be issued for an amount lower than the maturity value.

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Definitions:

Dividend Payout Ratio

An economic indicator that calculates the proportion of a corporation's profits distributed to its shareholders in the form of dividends.

Fixed Assets

Long-term tangible assets used in a business's operations and not expected to be converted to cash within a year.

Operating Capacity

The maximum output a company can produce in a given period under normal conditions, influencing its ability to meet demand.