When the market rate of return exceeds the coupon rate, a bond will sell at
A) par.
B) face value.
C) a premium.
D) a discount.

Name: When the market rate of return exceeds the coupon rate, a bond will sell at A) par. B) face value. C) a premium. D) a discount.
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Question

Quizplus · Accepted Answer

When the market rate of return exceeds the coupon rate, the bond's interest payments are less attractive compared to the prevailing market rates, leading investors to pay less for the bond, hence it sells at a discount.

When the Market Rate of Return Exceeds the Coupon Rate