Bonds sell at a discount when the market rate of interest is:
A) less than the bond's coupon rate.
B) greater than the bond's coupon rate.
C) equal to the bond's coupon rate.
D) None of the above is true.

Question

Quizplus · Accepted Answer

When the market rate of interest is greater than the bond's coupon rate, bonds will sell at a discount as investors are not willing to pay full price for a bond with a lower coupon rate compared to the market rate.

Bonds Sell at a Discount When the Market Rate of Interest