If a bond sells for less than its par value then the yield to maturity is greater than the coupon rate.

Question

Quizplus · Accepted Answer

When a bond sells for less than its par value, it is said to be selling at a discount. This means that the current yield of the bond is greater than its coupon rate. Yield to maturity takes into account the discount at which the bond was purchased and calculates the overall return an investor can expect to receive if they hold the bond until maturity. Therefore, if the bond sells for less than its par value, the yield to maturity will be greater than the coupon rate.

If a Bond Sells for Less Than Its Par Value