All else constant,a bond will sell at _____ when the yield to maturity is _____ the coupon rate.
A) a premium; higher than
B) a premium; equal to
C) at par; higher than
D) at par; less than
E) a discount; higher than

Question

Quizplus · Accepted Answer

When the yield to maturity is higher than the coupon rate, investors can earn a higher return by investing in new bonds that offer higher coupon rates. As a result, the price of existing bonds will decrease, causing them to sell at a discount.

All Else Constant,a Bond Will Sell at _____ When the Yield