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P=price paid C= redemption value F= Face amount (nominal or par value) r= coupon rate per period in terms of face amount i= yield-to-maturity rate

P=price paid
C= redemption value
F= Face amount (nominal or par value)
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r= coupon rate per period in terms of face amount
i= yield-to-maturity rate per payment period
Show that a bond that has a higher coupon rate than the market yield rate is at a premium, i.e. ifr>i, then P>C. (Hint: make the substitution of F = C.)

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