Question

When the discount rate or yield to maturity is lower than the coupon rate the bond price is less than its par value.
a. True
b. False

Answer 1

False ,

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

As coupon rate is in numerator and YTM in denominator when coupon rate is higher than YTM , bond price is greater than par value