Bond Pricing
A bond with a 5% coupon is trading at 97. This bond is selling at:
A bond quoted at 97 means it trades at 97% of par value, or $970 for a $1,000 bond. Since this is below par ($1,000), the bond is selling at a discount. This indicates market interest rates have risen above the 5% coupon
Complete Analysis & Legal Rationale
A bond quoted at 97 means it trades at 97% of par value, or $970 for a $1,000 bond. Since this is below par ($1,000), the bond is selling at a discount. This indicates market interest rates have risen above the 5% coupon rate.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.