All else constant, a bond will sell at ________ when the coupon rate is ________ the yield to maturity.

Name: All else constant, a bond will sell at ________ when the coupon rate is ________ the yield to maturity.
Brand: Quizplus
Rating: 4.8 (56 reviews)

Question

Quizplus · Accepted Answer

When the coupon rate is less than the yield to maturity, the bond is less desirable to investors because they could earn a higher return elsewhere. Hence, the bond will sell at a discount to compensate for the lower coupon rate.

All Else Constant, a Bond Will Sell at ________ When