Asked by Milano Irvin on Apr 29, 2024
Verified
A premium bond is defined as a bond which has a market price:
A) Is less than the face value.
B) That is equal to $1,000.
C) That is quoted at par.
D) Exceeds the face value.
E) Equal to the face value.
Premium Bond
A bond sold for more than its face value, typically occurring when its interest rate is higher than the current market rate.
Market Price
The ongoing rate at which a marketplace values the buying or selling of assets or services.
Face Value
The nominal value printed on a financial instrument, such as a bond or stock certificate.
- Distinguish between premium bonds and discount bonds in terms of their market price in relation to their face value.
Verified Answer
TW
Tasia WilsonMay 02, 2024
Final Answer :
D
Explanation :
A premium bond is one whose market price exceeds its face value, meaning investors are willing to pay more than the bond's nominal value.
Learning Objectives
- Distinguish between premium bonds and discount bonds in terms of their market price in relation to their face value.