CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

If the market rate of interest for a long-term debt issue is less than the stated rate of interest for the debt, the debt will be issued at ______.

A. less than its face value
B. more than its face value
C. its maturity value plus interest
Correct Answer: B

If the market rate of interest for a long-term debt issue is less than the stated rate of interest for the debt, the debt will be issued at a premium, an amount greater than face value.

User Contributed Comments 1

User Comment
LondonBoy The bond is issued at a premium and therefore the issuer has to pay a rate above the market rate to compensate for the premium (amount above par).
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