View A Bond Sells At A Discount When The Contract Rate Is Above The Market Rate Pics. Discounts also occur when the bond supply exceeds demand when the bond's credit rating is lowered, or when the perceived risk of default increases. A company issued 60 shares of $100 par value stock for $7,000 cash.
Is the interest rate prevailing in world financial markets. A bond sells at a discount when the: A bond's value is measured based on the present value of the future interest payments the bond if the market rate is greater than the bond's contract rate, the bond will be sold at a discount.
A company issued 60 shares of $100 par value stock for $7,000 cash.
Why do bonds sell at a discount? It may trade at a premium (above par, usually because market interest rates have fallen since. You have paid $980.30 for an 8% coupon bond with a face value of $1000 that matures in five years. Many investors are not comfortable with purchasing a bond for more than the par (face) value knowing that it is guaranteed to lose capital over the course.