A bond will be issued at a premium when the market rate of interest is greater than the stated rate. In a free market, the market rate (or "going rate") for products or services is the usual price charged for them. When demand rises, producers and the laborers tend to respond by raising the price they demand, so setting a higher market rate.
When demand falls, market rates tend to fall as well (see Supply and demand).The consumers typically utilize the market rate, also known as the "interbank rate" or the "mid-market rate," for the information or as a benchmark.
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