If a bond is trading at 103 the the interest expense is greater than the interest payment. the interest expense is less...

Question

Question

If a bond is trading at 103 the

the interest expense is greater than the interest payment.

the interest expense is less than the interest payment.

the interest expense is equal to the interest payment.

the interest expense can not be determined.

Answer 1

Answer #1

When bond is trading at premium then interest expense = Interest payment-Amortization of premium

So answer is b) the interest expense is less than the interest payment.

Answer 2

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