If a bond issue is announced carrying a coupon of 5 per cent per annum and an investor requires a greater rate of return,they will put in a bid price below the face value in order to try to get the higher yield they require.

Question

Quizplus · Accepted Answer

If current market interest rates have changed, an investor will put in a lower bid so that the existing coupon plus the capital gain on maturity gives a higher yield.

If a Bond Issue Is Announced Carrying a Coupon of 5