Bonds issued by BB&C Communications that have a coupon rate of interest equal to 10 percent currently have a yield to maturity (YTM) equal to 8 percent.Based on this information, BB&C's bonds must currently be selling at a premium in the financial markets.

Question

Quizplus · Accepted Answer

If the coupon rate is higher than the YTM, the bond must be selling at a premium, but in this case, the YTM is higher than the coupon rate, indicating that the bond is selling at a discount.

Bonds Issued by BB&C Communications That Have a Coupon Rate