Products & Their RisksQuestion 35 of 398
A bond trading at a price below its par value is said to be trading at:
a.A premium
b.Par
c.A discount
d.Its yield to maturity
Explanation
A bond priced below par ($1,000) is trading at a discount, which happens when its coupon is lower than current market yields. A price above par is a premium, and yield to maturity is a return measure, not a price description.
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