A discount bond will have a negative nominal interest rate when the: A. current bond yield is smaller than its yield to maturity. B. sum of the annual coupon payments and the face value of the bond is higher than its current price. C. current bond price is greater than its face value. D. bond is sold long before its maturity date.
Answer: A discount bond will have a negative nominal interest rate when the: " C. current bond price is greater than its face value ".
Explanation: because Discount bonds are those that issue below their nominal value, so if the current bond price is greater than its face value, the nominal interest rate will be negative.
