Asked by
Tabassum Pasha
on Nov 13, 2024
Verified
If the market rate of interest is 8% and a corporation's bonds bear interest at 7%, the bonds will sell at a premium.
Market Rate
The interest rate prevailing in the market for securities or loans, representing the cost of borrowing or the return on investment.
Interest
The charge for borrowing money or the return on invested capital.
Sell At Premium
Occurs when a financial instrument, such as a bond, is sold for a price higher than its face value.
- Comprehend the relationship between market interest rates and bond prices.
Verified Answer
RS
Learning Objectives
- Comprehend the relationship between market interest rates and bond prices.