Which of the Following Statements Is TRUE of a Bond

question 193

Multiple Choice

Which of the following statements is TRUE of a bond that is issued at a premium?

• A) The bond will be issued at an amount above face value.
• B) The stated interest rate is lower than the prevailing market interest rate.
• C) At maturity, the bond will repay an amount that is greater than the face value.
• D) The bond will be issued at par.

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Definitions:

Issuing Securities

This refers to the process by which corporations, governments, or other entities offer new stocks, bonds, or other financial instruments to the public to raise capital.

Regular Underwriting

The purchase of securities from the issuing company by an investment banker for resale to the public.

Preliminary Prospectus

An initial document provided by a securities issuer that details an investment offering for sale to the public.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a government or corporation (bond), or rights to ownership as represented by an option.