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    Question

    A bond selling at a price higher than its face value is

    said to be selling at:
    A Par Correct Answer Incorrect Answer
    B Discount Correct Answer Incorrect Answer
    C Premium Correct Answer Incorrect Answer
    D Market Rate Correct Answer Incorrect Answer

    Solution

    When a bond's market price exceeds its face value (par value), it is said to be trading at a premium, typically because its coupon rate is higher than the prevailing market interest rate.

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