Question

The prices of several bonds with face values of $ 1 comma 000 are summarized in the following​ table: Bond A B C D Price $ 973.22 $ 1 comma 043.19 $ 1 comma 149.26 $ 1 comma 000.00 For each​ bond, state whether it trades at a​ discount, at​ par, or at a premium. Bond A is selling at ▼ a discount par a premium . ​(Select from the​ drop-down menu.)

Bond B is selling at

Bond C is selling at

Answer 1

1)

Bond A is selling at discount.

When price of a bond is less than face value, bonds sell at a discount. Here, price of 973.22 is less than face value of $1,000.

2)

Bond B is selling at premium.

When price of a bond is greater than face value, bonds sell at a premium. Here, price of 1,043.19 is greater than face value of $1,000.

3)

Bond C is selling at premium.

When price of a bond is greater than face value, bonds sell at a premium. Here, price of 1,149.26 is greater than face value of $1,000.

4)

Bond D is selling at par.

When price of a bond is equal to face value, bonds sell at par. Here, price of 1,000 is equal to face value of $1,000.