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      Question

      A bond selling at a price above its face value is said

      to be selling at a:
      A Discount Correct Answer Incorrect Answer
      B Premium Correct Answer Incorrect Answer
      C Par Correct Answer Incorrect Answer
      D Coupon Correct Answer Incorrect Answer

      Solution

      When a bond's market price is higher than its face (par) value, it is trading at a premium. This typically happens when its coupon rate is higher than the prevailing market interest rates.

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