If the yield to maturity on a bond is greater than the coupon rate, you can assume
A)interest rates have decreased.
B)the price is below par.
C)the price is above par.
D)risk premiums have decreased.

Question

Quizplus · Accepted Answer

When the yield to maturity is higher than the coupon rate, it indicates that the bond is trading below its par value. This is because the higher yield means that investors are willing to pay less for the bond's cash flows. Therefore, option B is the correct choice. The other options are not necessarily true in this scenario.

If the Yield to Maturity on a Bond Is Greater