If a bond is selling for less than its face, or maturity, value and the market interest rate remains unchanged during the life of the bond, then the price (value) of the bond will increase as the maturity date nears.

Question

Quizplus · Accepted Answer

This is because the bond's yield, which is inversely related to its price, will gradually increase as the bond approaches maturity. This increase in yield will attract investors who are looking for higher returns, and therefore increase demand for the bond, causing its price to rise.

If a Bond Is Selling for Less Than Its Face