When the market price of a bond is above its par value, it sells at a premium; if it's below its par value, it is selling at a discount.

Question

Quizplus · Accepted Answer

This statement is true. If a bond is trading above its par value, it is selling at a premium because investors are willing to pay more than the face value of the bond due to its attractive features such as a higher coupon rate or a lower yield. Conversely, if a bond is trading below its par value, it is selling at a discount because investors are unwilling to pay the face value of the bond due to unattractive features such as a lower coupon rate or a higher yield.

When the Market Price of a Bond Is Above Its