All else constant, a coupon bond that is selling at a discount must have
A. 
a coupon rate that is equal to the bond yield 

B. 
a bond yield that is less than the coupon rate 

C. 
a market price that is higher than face value 

D. 
semiannual coupon payments 

E. 
a coupon rate that is less than the bond yield 
Whenever a bonds coupon rate is equal to the yield to maturity, the bond sells at par.
Whenever a bonds coupon rate is more than the yield to maturity, the bond sells at premium.
Whenever a bonds coupon rate is less than the yield to maturity, the bond sells at discount.
In the given case the bond is selling at a discount and hence it implies that option E i.e. a coupon rate that is less than the bond yield is the correct answer.
Feel free to ask in case of any query relating to this question
Get Answers For Free
Most questions answered within 1 hours.