A 30-year bond, with a face value of $1,000 currently sells for $1200. For this bond:...
A 30-year bond, with a face value of $1,000 currently sells for $1200. For this bond:
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The bond’s coupon rate exceeds the discount rate. |
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The bond’s coupon rate is identical to the discount rate. |
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The bond’s price is at a discount. |
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The bond’s price is at a par. |
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The bond’s coupon rate is less than the discount rate. |
Homework Answers
Since the bond in the question is trading at a value more than its par value, which implies it is trading at a premium.
Whenever a bond trades at a premium, it implies that the coupon rate of the bond is greater than the discount rate of the bond.
So, the correct answer is option of the bond’s coupon rate exceeds the discount rate.
Feel free to ask in case of any query relating to this question
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