If the yield to maturity on a bond is greater than the coupon rate, you can assume:
A) interest rates have decreased
B) the price is below the par
C) the price is above the par
D) risk premiums have decreased

Question

Quizplus · Accepted Answer

When the yield to maturity is greater than the coupon rate, it means the market interest rates have increased since the bond was issued. This puts pressure on the bond price, causing it to decrease below the par value in order to offer a competitive return to investors. Therefore, answer B is the correct choice.

If the Yield to Maturity on a Bond Is Greater