Another bond pays 8 percent while comparable yields are 6 percent. Tha…

Question

Another bond pays 8 percent while comparable yields are 6 percent. That bond will trade:

Accepted Answer

C. At a premium

1. Its payments are richer than the market now demands.
2. Buyers will bid the price up until the yield matches.
3. A coupon above the yield means it sells at a premium.
_Source: OpenStax Principles of Finance 2e, Chapter 10, Bonds and Bond Valuation._

Answer

Exactly at par

Answer

Below face value

Answer

At a discount

Another bond pays 8 percent while comparable yields are 6 percent. That bond will trade:

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