When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:

A. Premium
B. Discount
C. Par
D. Cannot be determined without more information

If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates..

Correct Answer: Premium ✔

Last Updated: August 17, 2017