If you buy a bond that is selling for less than its face, or maturity, value what will happen to the price (value) of the bond as the maturity date nears if market interest rates do not change during the life of the bond?

Question

Quizplus · Accepted Answer

When a bond is selling for less than its face value, it is said to be selling at a discount. As the bond gets closer to maturity, its price will gradually increase in order to reach its face value at maturity. This is because at maturity, the bondholder will receive the full face value of the bond regardless of what they paid for it. Since market interest rates are assumed to be constant, there is no reason for the bond's market value to change, so the price will increase in order to compensate for the discount at which it was purchased.

If You Buy a Bond That Is Selling for Less