If a bond is a premium bond, then:
A) the yield to maturity is greater than the coupon rate.
B) the yield to maturity is equal to the coupon rate.
C) its duration must be greater than its maturity.
D) its duration must be equal to its maturity.

Question

Quizplus · Accepted Answer

A premium bond is one whose price is higher than its face value or par value. This means that the bond's coupon rate is lower than the prevailing interest rates in the market, resulting in a yield to maturity that is greater than the coupon rate.

If a Bond Is a Premium Bond, Then