If investors are willing to pay more than the par value for a bond, you can be sure that
A)the tax rate on the bond must be very low.
B)the coupon rate on the bond must be higher than on other similar bonds.
C)the coupon rate on the bond must be lower than on other similar bonds.
D)the par value for the bond must be very low.

Question

Quizplus · Accepted Answer

Investors are willing to pay more than the par value for a bond primarily when the coupon rate (interest rate) of the bond is higher than the current market rate for similar bonds. This makes the bond more attractive as it offers higher returns compared to others.

If Investors Are Willing to Pay More Than the Par