Which of the following are characteristics of a premium bond? I. coupon rate < yield-to-maturity II....
Which of the following are characteristics of a premium bond?
I. coupon rate < yield-to-maturity
II. coupon rate > yield-to-maturity
III. market price > face value
IV. market price < face value
A. II and IV only
B. I only
C. I and III only
D. II and III only
Homework Answers
D. II and III only
A premium bond is one when the coupon rate is greater than yield to maturity. Due to this the issuer need to be compensated with a higher price. Therefore, market price will be greater than yield to maturity.
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Which of the following are characteristics of a premium
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I. coupon rate < yield-to-maturity
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