A bond which has a yield to maturity greater than its coupon interest rate will sell for a price:
A) below par.
B) at par.
C) above par.
D) that is equal to the face value of the bond plus the value of all interest payments.

Question

Quizplus · Accepted Answer

If the yield to maturity is greater than the coupon interest rate, it indicates that the bond is less attractive to investors than bonds with higher coupon rates. As a result, investors will demand a discount on the bond, which means that the bond will sell at a price below its par value.

A Bond Which Has a Yield to Maturity Greater Than