If the yield to maturity (the market rate of return) of a bond is less than its coupon rate, the bond should be selling at a discount; i.e., the bond's market price should be less than its face (maturity) value.

Question

Quizplus · Accepted Answer

If the yield to maturity is less than the coupon rate, meaning the bond is paying a higher interest rate than the current market rate, the bond may actually sell at a premium, meaning the market price is higher than the face value.

If the Yield to Maturity (The Market Rate of Return)