The yield to maturity is ________ than the ________ rate when the bond price is ________ its face value.
A)greater;coupon;above
B)greater;coupon;below
C)greater;perpetuity;above
D)less;perpetuity;below

Question

Quizplus · Accepted Answer

The yield to maturity is the total return anticipated on a bond if it is held until its matured date. When the bond price is below its face value, it is said to be selling at a discount. In this case, the yield to maturity will be greater than the coupon rate since the bond will make up the difference between the discounted price and its face value upon maturity. Therefore, the answer is B.

The Yield to Maturity Is ________ Than the ________ Rate

The Yield to Maturity Is Than the Rate