Question

When a company issues a bond at a premium:A. the company is more profitable than most companies in its industry.B. investors perceive the bond to be a very safe investment.C. the company's interest expense will be less than the interest paid each year.D. the company's interest expense will be more than the interest paid each year.

Answer 1

Answer and Explanation:

A) It might possibly be valid, however on the off chance that that were the situation they would move the coupon before issue and it would even now be given at standard.  

B) could conceivably be valid, yet once more, they would alter the parameters before issue and still issue at standard.

C) The bondholder will get the coupon installment (positive intrigue) and after that endure the amortization of the premium over standard incentive over the life of the bond (negative intrigue). Securities tend not to be given at a higher cost than expected, nonetheless, as the optional market creates and financing costs change, the security cost may increment better than average or diminish to less than impressive.  

D) This is not possible.