When a note or bond is selling at a premium over its par value and carries various possible maturity dates, the yield on the note or bond is generally figured to the nearest maturity date.

Question

Quizplus · Accepted Answer

When a note or bond is selling at a premium, its price is higher than its par value. The yield to maturity is calculated as the annual interest payment divided by the purchase price. The purchase price is the sum of the par value and the premium. The yield to the nearest maturity date is the yield that would be earned if the note or bond were held until that date.

When a Note or Bond Is Selling at a Premium