If a bond is selling at a premium, then
A) its coupon rate must be greater than its yield.
B) its coupon rate must be less than its yield.
C) its coupon rate must be equal to its yield.
D) its coupon rate must be equal to one-half the yield to maturity for a 5-year bond.

Question

Quizplus · Accepted Answer

When a bond sells at a premium, it means the bond's market price is above its face value, which occurs when the bond's coupon rate (the interest rate it pays) is higher than the current market interest rate, or yield.

If a Bond Is Selling at a Premium, Then