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14) The discount rate used to value a bond is A) the coupon interest rate. C) fixed for the life of the bond. B) the market r
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Answer : B) the market rate of interest

The discount rate is nothing but the current rate in the market.

The coupon rate is fixed by company. The coupon rate may be high or low than current rate.

If the coupon rate is higher than the current market rate (YTM), the bond will trade at a premium

otherwise will trade at discount.

The coupon rate is fixed for life time and it is determined by the issuing company.

But the current market rate is determined by market forces and that will the market value of bond.

In other words, discount rate is current market rate or YTM. (Thumbs up please)

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