If a bond\'s yield to maturity exceeds its coupon rate, the bond\'s: a. current
ID: 2800674 • Letter: I
Question
If a bond's yield to maturity exceeds its coupon rate, the bond's:
a.
current yield is equal to the coupon rate.
b.
price must be less than its par value.
c.
maturity value is more than its face value.
d.
current yield is equal to the capital gain on the maturity of the bond.
e.
maturity value is less than the bond's market value.
a.
current yield is equal to the coupon rate.
b.
price must be less than its par value.
c.
maturity value is more than its face value.
d.
current yield is equal to the capital gain on the maturity of the bond.
e.
maturity value is less than the bond's market value.
Explanation / Answer
b is the answer
price must be less than its par value.
the above is the answer as you need discount on par value to earn higher YTM.
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