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2 years ago

If a bond is trading at a premium, what is the relationship between the bond's coupon rate, current yield and yield to maturity?

1 answer:

3 0

When a bond is trading at a premium, then the coupon rate is higher than the current yield and the yield to maturity.

<h3>How does a bond trade at premium?</h3>

For a bond to trade at premium, the coupon rate would have to be higher than the yield to maturity and the current yield.

Such a bond would trade at premium because the present value of the bond would be more than the par value thanks to the coupon being larger than the discount rate which is the yield to maturity.

Find out more on the yield to maturity at brainly.com/question/14012047.

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