Quality Construction Products Inc.issued $1,000 face value 20-year bonds five years ago.These bonds are currently selling for $1,218.47.From this information we can conclude that the Quality Construction Products Inc.bonds have a yield-to-maturity greater than the coupon rate on these bonds.

Question

Quizplus · Accepted Answer

The bonds selling for more than their face value (at a premium) indicates that the current interest rates are lower than the coupon rate of the bonds, hence the yield-to-maturity would be less than the coupon rate.