Asked by Kitty Dollas on May 22, 2024
Verified
A bond with a par value of $1,000 trading at 97 ½ sells for a premium.
Par Value
A nominal value of a security or stock set by the issuing company, which may not reflect its market value.
Premium
An amount paid for an insurance policy or the amount by which a bond or stock sells above its face value.
- Clarify the disparity between the market value and the book value of bonds.
Verified Answer
JM
Jennifer MartinMay 28, 2024
Final Answer :
False
Explanation :
A bond trading at 97 ½ is selling below its par value of $1,000, which means it is selling at a discount, not a premium.
Learning Objectives
- Clarify the disparity between the market value and the book value of bonds.