If bonds are issued with a stated interest rate higher than the market interest rate, then the bonds will be issued at premium.
Given an incomplete sentence related to bonds.
We are required to complete the sentence with the appropriate term which completes the sentence and gives appropriate meaning and sense.
A bond is basically type of security under which the issuer owes the holder a debt, and is obliged – depending on the terms – to repay the principal of bond at the maturity date and interest over a specified amount of time.
When bonds are issued at a stated interest which is greater than the market rate of interest then it is said that the bonds are issued at premium.
Hence if bonds are issued with a stated interest rate higher than the market interest rate, then the bonds will be issued at premium.
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