QuestionMay 29, 2025

If the yield to maturity on a bond is greater than the coupon rate, the bond price will be greater than the par value, and the bond will sell at a discount. the bond price will be greater than the par value, and the bond will sell at a premium. the bond price will be less than the par value, and the bond will sell at a premium. the bond price will be less than the par value, and the bond will sell at a discount.

If the yield to maturity on a bond is greater than the coupon rate, the bond price will be greater than the par value, and the bond will sell at a discount. the bond price will be greater than the par value, and the bond will sell at a premium. the bond price will be less than the par value, and the bond will sell at a premium. the bond price will be less than the par value, and the bond will sell at a discount.
If the yield to maturity on a bond is greater than the coupon rate,
the bond price will be greater than the
par value, and the bond will sell at a
discount.
the bond price will be greater than the
par value, and the bond will sell at a
premium.
the bond price will be less than the
par value, and the bond will sell at a
premium.
the bond price will be less than the
par value, and the bond will sell at a
discount.

Solution
4.4(231 votes)

Answer

the bond price will be less than the par value, and the bond will sell at a discount. Explanation 1. Understand Yield to Maturity vs. Coupon Rate If the yield to maturity (YTM) is greater than the coupon rate, it indicates that the bond's return is higher than what the bond pays annually. 2. Determine Bond Price Relation to Par Value When YTM > Coupon Rate, the bond price must be less than the par value because investors require a higher return, leading to a discount.

Explanation

1. Understand Yield to Maturity vs. Coupon Rate<br /> If the yield to maturity (YTM) is greater than the coupon rate, it indicates that the bond's return is higher than what the bond pays annually.<br /><br />2. Determine Bond Price Relation to Par Value<br /> When YTM > Coupon Rate, the bond price must be less than the par value because investors require a higher return, leading to a discount.
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