When the market interest rate is 13% and the coupon rate is 10%,a bond sells at
A)a discount.
B)a premium.
C)par.
D)liquidation value.
E)Cannot be determined without more information

Question

Quizplus · Accepted Answer

When the market interest rate is higher than the coupon rate, the bond will sell at a discount. In this case, the coupon rate is 10%, which is lower than the market interest rate of 13%, indicating that the bond is not as attractive to investors as other investments that offer higher yields. As a result, the bond will sell at a discount to compensate investors for the lower return.

When the Market Interest Rate Is 13% and the Coupon