A bond sells at discount. Which of the following is feasible?
[YTM = yield to maturity]
A bond sells at discount. Which of the following is feasible?
[YTM = yield to maturity]
Solution
✅ Correct Option: 1
For a bond selling at a discount, market price is below face value, so coupon yield is less than current yield, which in turn is less than YTM.
Only the ordering with YTM highest satisfies coupon yield current yield YTM.
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