honeycfa

A bond will sell at a discount when the coupon rate is:

A) less than the current yield and the current yield is less than the yield to maturity.

B) greater than the current yield and the current yield is greater than the yield to maturity.

C) less than the current yield and the current yield is greater than the yield to maturity.

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When a bond sells at a discount the nominal yield, coupon yield divided by the face value, will be less than current yield and current yield will be less than YTM. 

honeycfa

Which of the following statements concerning the yield-to-maturity on a bond is CORRECT? Yield to maturity (YTM) is:

A) based on the assumption that any payments received are reinvested at the current yield.

B) the discount rate that will set the present value of the payments equal to the bond price.

C) below the current yield minus capital gain when the bond sells at a discount, and above the current yield plus capital loss when the bond sells at a premium.

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Reinvestments occur at the YTM. The YTM will find the present value of a future value and associated payments.