Question

If the market interest rate is 6%, a $10,000, 7%, 5-year bond, that pays interest semiannually would sell at an amount:

a. greater than face value.
b. less than face value.
c. less than the maturity value.
d. equal to face value.

Answer 1

a. greater than face value

Step-by-step explanation:

If the coupon rate of the bond is greater than its yield to maturity or market interest rate, the bond would sell at an amount greater than face value.