charfear8811 charfear8811
  • 14-12-2020
  • Business
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The yield to maturity will be greater than the coupon rate when a bond is selling at a premium. true/false

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Parrain
Parrain Parrain
  • 14-12-2020

Answer: False

Explanation:

When a bond is selling at a price that is above the Par value, it is said that the bond is selling at a Premium. This happens when the Coupon rate is higher than the Yield to Maturity.

The logic here is that the bond will be paying out more as coupon payments than the current yields in the market so it is a more attractive option that will command a higher price.

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