Question

If bonds are issued at 101.25, this means that ____________________

a.a $1,000 bond sold for $101.25.
b.the bonds sold at a discount.
c.a $1,000 bond sold for $1,012.50.
d.the bond rate of interest is 10.13% of the market rate of interest.

Answer 1

Answer:

c.a $1,000 bond sold for $1,012.50.

Explanation:

We assume the par value is $1,000 and since the bond is issued at 101.25 that means its selling price is

= $1,000 × 101.25%

= $1,012.50

Since the bond is issued more than the face value that reflects the premium and if the bond is issued less than the face value so it is issued at a discount

So the right option is c.