When a callable bond sells at a discount,the bond's coupon rate is ________ than market yields and the yield to worst is the yield to ________.

Question

Quizplus · Accepted Answer

When a callable bond sells at a discount, its coupon rate is lower than market yields, as investors demand a higher yield to offset the risk of the bond being called. The yield to worst is the lowest potential yield an investor could receive, either through the bond being called or reaching maturity. Therefore, the yield to worst is the yield to maturity in this case, making choice D the best answer.

When a Callable Bond Sells at a Discount,the Bond's Coupon