In practice, the value of a bond in the marketplace is rarely equal to its par value. Whenever the required return on a bond differs from the bond’s coupon interest rate, the bond’s value will differ from its par value. The required return is likely to differ from the coupon interest rate because either (1) economic conditions have changed, causing a shift in the basic cost of long-term funds, or (2) the firm’s risk has changed. Increases in the basic cost of long-term funds or in risk will raise the required return; decreases in the cost of funds or in risk will lower the required return.