Practice mode Finance

If a bond’s coupon rate is higher than the going market rate of interest, at what price will it sell?

Correct answer C. More than its par value

Explanation

When the coupon exceeds the market rate, investors pay extra for the above-market interest, so the bond trades at a premium, above its par value.

Report a problem

Answer checked How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

Advertisement

Have a question about this answer?

Your email address will not be published. Required fields are marked *

Links and website addresses are not allowed in comments.