If you have a bond with a face value of $1,000 and a coupon rate of 2.25%,

Question:

If you have a bond with a face value of $1,000 and a coupon rate of 2.25%, but the market interest rate for such bonds is 2.5%, will your bond sell at par, at a premium, or at a discount? Explain why.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

Fantastic news! We've Found the answer you've been seeking!