If a bond is issued at 98,the coupon rate was:

Question

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If a bond is issued at 98, it means the bond is effectively being sold for 98% of its face value. This is a discount to the face value of the bond.

The coupon rate is the annual interest rate that the bond pays to its holders. It is set at the time of issuance and does not change over the life of the bond.

If the bond is issued at a discount (below its face value), it means that the effective yield to maturity (the total return an investor can expect to earn from the bond) is higher than the coupon rate. This is because the investor is paying less for the bond upfront but will still receive the full face value at maturity.

Therefore, if the bond is issued at 98, the coupon rate must be lower than the market rate of interest to make the bond attractive to investors. If the coupon rate was higher than the market rate of interest, investors would not be willing to buy the bond at a discount because they could earn a higher yield elsewhere.

If a Bond Is Issued at 98,the Coupon Rate Was