You can be sure that a bond will sell at a premium to par when ________.

Question

Quizplus · Accepted Answer

When the coupon rate of a bond is greater than its yield to maturity, it means that the interest payments (coupons) received by the bondholder are higher than the yield they would receive if they held the bond until maturity. As a result, investors are willing to pay a premium (more than the face value or par value) to purchase the bond and receive those higher interest payments.

You Can Be Sure That a Bond Will Sell at a Premium