Bond interest paid is Question options: a) higher when bonds sell at a discount and lower when bonds sell at a premium. b) the same whether bonds sell at a discount or a premium. c) lower when bonds sell at a premium. d) higher when bonds sell at a discount.

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Shnookie

11 May, 03:57

Bond interest paid is Question options: a) higher when bonds sell at a discount and lower when bonds sell at a premium. b) the same whether bonds sell at a discount or a premium. c) lower when bonds sell at a premium. d) higher when bonds sell at a discount.

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Master · Answer 1

b) the same whether bonds sell at a discount or a premium.

Explanation:

As we know that

The bond interest is paid on the par value and we normally assume the par value is $100 or $1,000

The selling value for the bond interest paid is not relevant.

Therefore, the interest paid on the bond would remain the same whether bonds sell at a discount or premium as it considered only the par value, not the selling value.