Question

Which one of these equations applies to a bond that currently has a par value that...

Which one of these equations applies to a bond that currently has a par value that exceeds market price?

Market value > Face value

Current yield < Coupon rate

Yield to maturity > Coupon rate

Yield to maturity = Current yield
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Answer #1

The Equation is bond that currently has a par value that exceeds market price which simply means that Current market price is less than the Par Value.

As per Inverse relationship between Market Pruce of Bond and Yield to Maturity(YTM) of Bond, when the Market Price is less than the Par Value the YTM is higher the coupon rate and vicer-versa.

Since, Market price is less than the Par Value the YTM will be higher than the coupon rate.

option 3. Yield to maturity > Coupon rate

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