A bond that is sold at a price lower than its face value is known as a discount bond. This typically occurs when the market interest rate is higher than the bond's coupon rate, making it less attractive to investors. Discount bonds can offer potential gains through capital appreciation if the bond's market value increases over time. However, they also carry the risk of a potential loss if the bond is sold before maturity. Therefore, it's important for investors to carefully consider the potential risks and rewards before investing in discount bonds.
