If a bond is selling at a discount, then:
A)the yield to maturity is less than the coupon rate.
B)the yield to maturity is greater than the coupon rate.
C)the yield to maturity is equal to the coupon rate.
D)its duration must be greater than its maturity.
E)its duration must be equal to its maturity.

Question

Quizplus · Accepted Answer

When a bond is selling at a discount, it means its market price is lower than its face value or par value. This implies that the yield to maturity is greater than the coupon rate, as the investor is purchasing the bond at a lower price but will receive the full par value at maturity.

If a Bond Is Selling at a Discount, Then