Canadian Securities Course (CSC) Practice Exam · Question
A bond trading at a premium (above its face value) typically occurs when:
A bond trades at a premium when its coupon rate is higher than prevailing market interest rates, making its fixed interest payments more attractive compared to
Start free practice for Canadian Securities Course (CSC) Practice Exam
335 questions · no signup required · 40 free questions per day
Question: A bond trading at a premium (above its face value) typically occurs when:
Answer options:
- Its coupon rate is lower than current market interest rates. ✅ Its coupon rate is higher than current market interest rates.
- The bond is nearing its maturity date.
- The issuer's credit rating has been downgraded.
Correct answer: Its coupon rate is higher than current market interest rates.
Explanation: A bond trades at a premium when its coupon rate is higher than prevailing market interest rates, making its fixed interest payments more attractive compared to new bonds being issued. Investors are willing to pay more to receive these higher payments.
Start free practice for Canadian Securities Course (CSC) Practice Exam
335 questions · no signup required · 40 free questions per day
More about Canadian Securities Course (CSC) Practice Exam
More for Canadian Securities Course (CSC) Practice Exam candidates
Ready to practice?
Free, no signup required. Build a wrong-question list as you go.
Start Free Canadian Securities Course (CSC) Practice Exam Practice →Related courses
Other Canadian certifications candidates often prepare for alongside this one.