If the required rate of return on a bond (rd)is greater than its coupon interest rate and will remain above that rate, then the market value of the bond will always be below its par value until the bond matures, at which time its market value will equal its par value.(Accrued interest between interest payment dates should not be considered when answering this question.)

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When the required rate of return on a bond is greater than its coupon interest rate, the bond is less attractive to investors and its market value will decrease. This means that the bond will trade below its par value until it matures and its market value will equal its par value at that time.

If the Required Rate of Return on a Bond (Rd)is