QUESTION 15 Premium, Discount, and Par Now that we have calculated Values and Yields for Bonds, we will stop and define three type of bonds. Then match each of the following characteristics to the type of bond below. 1. Discount bonds (Link to Explanation of Discount Bonds) 2. Premium Bonds (Article describing Premium Bonds) 3. Par Value Bonds A. Discount Bond B. Par Value Bond C. Premium Bond Price above Par Value ($1000) Yield to maturity below Coupon Rate Low Risk, High Coupons Often Investment Grade Bonds Price below Par Value ($1000) Yield to Maturity > Coupon Rate High Risk Bonds May have Junk Ratings When price=p value and coupon = market interest rates (or yield). This is the case when bonds are issued (when they originate)