If coupon rate is more than current rate of interest then bond will be sold
A. More than its par value
B. Seasoned par value
C. At par value
D. Below its par value
Answer: Option A
Solution (By Examveda Team)
A bond's interest rate is related to the current prevailing interest rates and the perceived risk of the issuer. When interest rates are less than the coupon rate, the bond can be sold at a premium (higher than the face value). When current interest rates are greater than a bond's coupon rate, the bond will sell below its face value at a discount.This Question Belongs to Commerce >> Financial Management
A is right answer.
Explanation:
When current interest rates are greater than a bond's coupon rate, the bond will sell below its face value at a discount. When interest rates are less than the coupon rate, the bond can be sold at a premium--higher than the face value.