On June 2, 2010, Dow Chemical's 4.1 percent coupon bonds, with face values of $100, sold for $95.This means that the yield on these bonds was

Question

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When a bond is sold at a price lower than its face value, it means that the yield is higher than the coupon rate. In this case, the bond is sold at $95 instead of $100, indicating a discount of $5. As the coupon rate is 4.1 percent, the yield on the bond is higher than 4.1 percent to compensate the investor for the discount. Therefore, the best choice is D, greater than 4.1 percent.