A bond with a $100 annual interest payment and $1,000 face value with five years to maturity (not expected to default) would sell for a premium if interest rates were below 9% and would sell for a discount if interest rates were greater than 11%.
Answer the following statement true (T) or false (F)
True
When the market yield is greater than the coupon rate of interest, a bond sells for less than its par value, or at a discount. When the market yield is less than the coupon rate of interest, the bond sells for greater than its par value, or at a premium. See 6-5: Interest Rates and Bond Values
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What will be an ideal response?
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Indicate whether the statement is true or false