Miller Motorworks has a $1,000 par value, 8% annual coupon bond with interest payable semiannually with a remaining term of 15 years. The annual market yield on similar bonds is 6%. This bond will at a discount from par.

Question

Quizplus · Accepted Answer

When the market yield is lower than the coupon rate (8% > 6%), a bond will trade at a premium, not at a discount. Therefore, the statement is false.

Miller Motorworks Has a $1,000 Par Value, 8% Annual Coupon