If the market interest rate is greater than the coupon interest rate, bonds will sell
A)at a premium.
B)at face value.
C)at a discount.
D)only after the stated interest rate is increased.

Question

Quizplus · Accepted Answer

If the market interest rate is greater than the coupon interest rate, it means that new bonds being issued would offer a higher return to investors. As a result, existing bonds with lower coupon rates will be less attractive to buyers and will need to be sold at a discount (i.e., below face value) to compensate for the lower yield.

If the Market Interest Rate Is Greater Than the Coupon