Question

In: Finance

If Jamie purchases a corporate bond for $960, she is said tohave bought it at:...

If Jamie purchases a corporate bond for $960, she is said to have bought it at:

Multiple Choice

A)the current coupon rate.

B)par value.

C)a premium.

D)a discount.

D)the current yield.

Solutions

Expert Solution

Whenever a bond's purchase price is equal to the par value, it means that the bond has been purchased at par value.

Whenever a bond's purchase price is less than the par value, it means that the bond has been purchased at discount.

Whenever a bond's purchase price is more than the par value, it means that the bond has been purchased at premium.

In the present case, the bond has been purchased at less than the par value, it implies that she is said to have bought it at discount.

So, the correct answer is option D i.e. a discount.

jeff jeffy answered 2 years ago
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