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Discount to par

Is a term that describes when a bond is being sold and traded at a discount price. When a bond is being traded at a discount (below par), its current yield is higher than the fixed coupon rate. This can happen for a variety of reasons but the most common is a rise in the interest rate which causes investors to switch to similar risk-related assets offering a greater return i.e. the excess supply of bonds forces the price to below par.

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