Question

If a bond's coupon rate is above the yield required by the market, the bond value will be-

Q: Answer-&lt;p&gt;If a bond&#039;s coupon rate is above the yield required by the market, the bond value will...

If a bonds coupon rate is above the yield required by the market, the bond will trade at a premium, because investors will be willing to pay a higher price to achieve the additional yield. As long investors continue to buy the bond, there will be more demand than supply of the bond, thus the yield will decrease until it reaches market equilibrium. Similarly, when a bonds coupon rate is below the market yield, the bond will trade below its par value or at a discount.