12
InstructionMultiple Choice

Buying Bonds

Question 12 • ****Spring 2026 Financial Math - MA2007 MQS21QXV

Which statement or statements apply to a bond which is selling at a premium?I. The market value exceeds the par value.II. The selling rate is above 100.III. It is sold by corporations, not by the government.

Answer
A
I and II
B
I only
C
III only
D
I, II, and III

Explanation

A bond sells at a premium when its market price is greater than its par value, so statement I is true. Bond prices are commonly quoted as a percentage of par; a premium price is above 100, making statement II true. Premium bonds can be issued by corporations or governments, so statement III is false. The correct choice is I and II.

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