Respuesta :
The answer is changes in interest rates and YTM will be less than the coupon rate.
Let's take a scenario where a bond has a yield of 2%. And if interest rates go up the earlier 2% interest rate is no longer an attractive interest rate. This is because we can now buy a similar bond with a yield of 2.5%.
So in order to compensate for these, the value of these bonds goes down.
Just the opposite is true when interest rates are decreasing.
The very best time to buy bonds is when interest rates are high and going down.
Also, any rational investor will pay more for a bond with a yield of 12% over a bond with a yield of only 10%, assuming everything else is equal.
Premium bonds are those bonds whose market price is greater than the par value of the bond.
And YTM is the internal rate of return (IRR) on a bond which equates to the present value of cash flows associated with the bond.
Therefore, in the case of premium bonds, YTM will be less than the coupon rate.
Hence, some bonds sell at a premium over par value while other bonds sell at a discount because of the changes in the interest rates. And YTM will be less than the coupon rate for premium bonds.
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