What Does It Mean for a Bond to Sell at a Premium

question 171

Multiple Choice

What does it mean for a bond to sell at a premium?

• A)The yield to maturity is above the coupon rate.
• B)The bond has an exceptionally good credit rating.
• C)The bond rating is above investment grade.
• D)The bond sells for more than par value.

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Definitions:

Small Investor

An individual investor who makes relatively small amounts of investments in the stock market or other financial markets, often with limited resources.

Mutual Funds

Mutual funds are investment vehicles comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.

Abnormal Return

A term in finance that refers to the difference between an actual investment return and the expected return, based on the asset's risk and market movements.

Fourth Quarter Earnings

The financial performance of a company in the final quarter of its fiscal year, often used as an indicator of annual performance.