Multiple choice

When interest rates for similar maturities are 11%, a bond with a coupon of 9% will sell

  1. above par value

  2. below par value

  3. at par

  4. at a price which is not related to interest rates for similar maturities
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Since the similar type of bonds are offering more interest (11%), so a bond with a coupon of 9% will sell below par value.

Keep practicing — related questions