A corporate bond trading at below par will have

Question

Quizplus · Accepted Answer

A corporate bond trading at below par means that the market interest rates have increased since the bond was issued, resulting in a lower price for the bond. The yield to maturity is the return an investor can expect if they hold the bond until maturity, taking into account the current market price, coupon rate, and years until maturity. Since the bond is trading at a discount, the yield to maturity will be higher than the coupon rate to compensate for the lower price and provide the investor with an attractive return. Therefore, choice A is correct. Choices C and D are not necessarily true as the risk level of a bond depends on various factors, including the creditworthiness of the issuer, economic conditions, and interest rate movements.

A Corporate Bond Trading at Below Par Will Have