# Bond Yields, Interest Rates and Bond Prices

Which statement is most correct:

a. if a bonds yield to maturity exceeds its annual coupon, then the bond will be trading at a premium

b. if interest rates increase the relative b, price change of a 10 year coupon bond will be greater than the relative price change of a 10 year zero bond

c. if a coupon bond is selling at par its current yield equal its yield to maturity.

d. both a and c are correct

e. none are correct

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#### Solution Preview

a.if a bonds yield to maturity exceeds its annual coupon, then the bond will be trading at a premium: This is not correct. If the bond investors are demanding a greater yield than the bond is providing at par value, they will pay less than par value (i.e., a discount) in order to achieve ...

#### Solution Summary

The solution explains what bond yield statement is correct.