A bond trading for less than its face value is said to be priced at what?

• A. Premium
• B. Treasuries
• C. Discount
• D. Open-End Fund

Answer: (C)

When a bond trades for less than its face value, it is priced at a discount. The face value (par) is what you’ll receive at maturity, and the market price can be below, at, or above that amount. A price below par happens when prevailing interest rates are higher than the bond’s coupon, so investors accept less upfront to earn a comparable overall return. The discount means you also still get the face value at maturity plus the coupon payments.

This is the best answer because it directly uses the standard pricing term for bonds relative to par. A price above par would be a premium, a term describing a government debt issuance like Treasuries isn’t about pricing relative to par, and an Open-End Fund is a mutual fund structure, not a bond’s price descriptor.