If the coupon rate on a bond is 8% and the bond is selling at a discount, Will the yield to maturity on the bond be higher than or lower than 8%?

If the coupon rate on a bond is 8% and the bond is selling at a discount, then the yield to maturity on the bond be higher than the coupon rate (8%). Because when the coupon rate is lower than the yield to maturity then the bond is selling at discount.

Lets see the example;

We can calculate the yield to maturity by using the following formula in excel:-

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to maturity

Nper = 6 periods

Pmt = Coupon payment = $1,000*8% = $80

PV = $950

FV = $1,000

Substituting the values in formula:

= rate(6,80,-950,1000)

= 9.12%