A bond sells at a discount when the:

A) Contract rate is above the market rate.
B) Contract rate is equal to the market rate.
C) Contract rate is below the market rate.
D) Bond has a short-term life.
E) Bond pays interest only once a year.

Contract Rate

A contract rate is a pre-agreed price or fee set in a contract for services or goods, which remains fixed for the duration of the agreement.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are traded in the open market.

Discount

A reduction in the price of goods or services offered to customers, usually as a motivation to encourage sales.