Goo Goo Enterprises invested in the bonds of Greater Glouster. These bonds pay interest of 3%. The effective rate of interest for similar bonds on the date of investment was 4%. Did Goo Goo purchase the bonds at a discount or premium?

A) These bonds were purchased at a discount because the stated rate exceeds the market rate.
B) These bonds were purchased at a premium because the stated rate exceeds the market rate.
C) These bonds were purchased at a discount because the market rate exceeds the stated rate.
D) These bonds were purchased at a premium because the market rate exceeds the stated rate.

Answer: C

Business

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