If the market interest rate is higher than the coupon interest rate (or stated rate) of the bond, the bond sells:
A) at face value.
B) at a premium.
C) at a discount.
D) It is undeterminable.

Question

Quizplus · Accepted Answer

When the market interest rate exceeds the coupon rate, the bond's attractiveness decreases, leading it to sell below its face value, or at a discount, to compensate investors for the lower interest income.

If the Market Interest Rate Is Higher Than the Coupon