When a bond's value differs from par, its yield to maturity will differ from its coupon interest rate.

Question

Quizplus · Accepted Answer

Yield to maturity takes into account the bond's price in the market, which can be different from its par value. Therefore, if the bond's price is lower than par, the yield to maturity will be higher than the coupon interest rate, and if the bond's price is higher than par, the yield to maturity will be lower than the coupon interest rate.

When a Bond's Value Differs from Par, Its Yield to Maturity