Treasury operations involve monitoring the relationship between market yields and coupon rates. When the prevailing market interest rate for a specific category of bonds falls below the fixed coupon rate of an existing bond, the market price of that bond will generally:

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Banking · Treasury Operations and Bond Markets

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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trade at a premium above its face value

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Answer 1

decrease in proportion to the time left to maturity

Answer 2

trade at a premium above its face value

Answer 3

remain exactly at its face value

Answer 4

trade at a discount below its face value

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