\( 1 \leftarrow \begin{array}{l}\text { Quality Construction Products Inc. issued } \$ 1,000 \text { face value } 20 \text { - year bonds five years ago. These } \\ \text { bonds are currently selling for } \$ 1,218.47 \text {. From this information we can conclude that the Quality } \\ \text { Construction Products Inc.bonds have a yield - to - maturity greater than the coupon rate on these } \\ \text { bonds. } \\ \text { False }\end{array} \)

To determine whether the statement is true or false, we need to analyze the relationship between the selling price of the bonds, their face value, and the yield-to-maturity (YTM) compared to the coupon rate. ### Known Conditions: 1. **Face Value of Bonds (F)**: \$1,000 2. **Current Selling Price (P)**: \$1,218.47 3. **Time to Maturity (t)**: 20 years - 5 years = 15 years 4. **Coupon Rate**: Not explicitly given, but we can infer it based on the selling price and face value. ### Analysis: 1. **Understanding Bond Pricing**: - When bonds are selling for more than their face value (in this case, \$1,218.47 > \$1,000), it typically indicates that the coupon rate is higher than the current market interest rates. This is because investors are willing to pay a premium for the higher interest payments. 2. **Yield-to-Maturity (YTM)**: - The YTM is the total return anticipated on a bond if it is held until it matures. It takes into account the bond's current market price, its face value, the coupon payments, and the time remaining until maturity. - If the YTM is greater than the coupon rate, the bond would sell at a discount (less than face value). Conversely, if the YTM is less than the coupon rate, the bond would sell at a premium (more than face value). ### Conclusion: Since the bonds are currently selling for \$1,218.47, which is greater than the face value of \$1,000, we can conclude that the coupon rate must be greater than the yield-to-maturity. Therefore, the statement that "the Quality Construction Products Inc. bonds have a yield-to-maturity greater than the coupon rate on these bonds" is **False**. Thus, the final answer is: **False**.