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

Question

Quizplus · Accepted Answer

When the yield to maturity is higher than the coupon rate, the bond will sell at a discount (less than its par value). This is because investors demand a higher return for taking on the risk of a lower coupon payment compared to the prevailing interest rates. The opposite is true when the yield to maturity is lower than the coupon rate, which results in the bond selling at a premium (higher than its par value).

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