When the ________ is less than the yield to maturity,the bond sells at a/the ________ the par value.

Question

Quizplus · Accepted Answer

The yield to maturity is the rate of return an investor would earn if they held the bond until maturity, taking into consideration the bond's current market price, its coupon rate, and its par value. If the coupon rate is less than the yield to maturity, then the bond is less valuable, and therefore sells at a discount to the par value. This is because investors would need to pay less to purchase the bond in order to achieve the same rate of return as the yield to maturity.

When the ________ Is Less Than the Yield to Maturity,the