If a bond is selling at a discount, which of the following statements is correct?
A)The current yield must be greater than the coupon rate.
B)The coupon rate must be greater than the yield to maturity.
C)The bond must have a low bond rating.
D)All of these choices are correct.

Question

Quizplus · Accepted Answer

When a bond is selling at a discount, it means its current market price is less than its face value or par value. This implies that the yield to maturity is greater than the coupon rate, hence the current yield must be greater than the coupon rate. Therefore, option A is the correct choice. Option B is incorrect because the yield to maturity is greater than the coupon rate, not the other way around. Option C is also incorrect as the bond rating is not mentioned and has no direct relation to the bond selling at a discount.

If a Bond Is Selling at a Discount, Which of the Following