Question #s7-prep2-s7-q-245Function 3Fundamental

Bond Pricing

XYZ 5.50s 2030 last traded at 102. This bond is selling at:

Correct Choice: B

Premium = above 100 (coupon > market rate). Discount = below 100 (coupon < market rate).

Complete Analysis & Legal Rationale

A price of 102 means 102% of par value ($1,020 for a $1,000 bond). Since this exceeds par (100), the bond is trading at a PREMIUM. This occurs when the coupon rate exceeds current market rates.

Distractor Autopsy (Why Other Options Are Traps)

FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:

Choice AIncorrect

Concept Trap

Par would be 100, not 102.

Choice BCorrect

None

Matches the verified teaching point in the explanation.

Choice CIncorrect

Concept Trap

A discount would be below 100, like 98.

Choice DIncorrect

Concept Trap

Asset value is not a bond pricing term.

Authorities & References:

Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.

Official SourceFINRA FINRA Series 7 Content Outline — General Securities Representative Examination (Series 7) Content Outline

Bond Pricing

Complete Analysis & Legal Rationale

Distractor Autopsy (Why Other Options Are Traps)

Regulatory Authority & Citations: Primary Legal Sources

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