When a bond is selling at a discount, what does this indicate about its market price?

When a bond is selling at a discount, it indicates that its market price is less than the par value. This situation typically arises when the bond's coupon rate is lower than the prevailing interest rates in the market. Investors are less willing to pay the full par value because they can obtain higher yields from newly issued bonds that offer better rates. Consequently, to attract buyers, the price of the existing bond must decrease, resulting in a selling price that is below its par value. This dynamic is fundamental to understanding bond pricing and yield relationships in the fixed-income market.