Question

In an era of particularly low interest rates, which of the following bonds is most likely to be called? A. zero-coupon bonds B. coupon bonds selling at a discount C. Coupon bonds selling at a premium D. floating-rate bonds

Answer 1

Answer: coupon bonds selling at a premium

Explanation:

A premium bond is simply a bond that is being traded at a higher level than it's par value. A bond will typically trade at a premium when such bond gives an

interest rate which is above the current interest rates that is being offered for new bonds.

Therefore, in an era of particularly low interest rates, coupon bonds selling at a premium is most likely to be called.