If the required return is less than the coupon rate, a bond will sell at ________.

Name: If the required return is less than the coupon rate, a bond will sell at ________.
Brand: Quizplus
Rating: 5.0 (50 reviews)

Question

Quizplus · Accepted Answer

When the required return (or yield to maturity) on a bond is less than the coupon rate, the bond will sell at a premium because its cash flows (interest payments) are more attractive compared to the current market rates. Investors are willing to pay more for this bond, hence its price exceeds its par value.

If the Required Return Is Less Than the Coupon Rate