Bond Yields
A bond with a 6% coupon trading at 105 would have which yield as the LOWEST?
At premium: investor loses premium at maturity/call, reducing yields. YTC is lowest.
Complete Analysis & Legal Rationale
When a bond trades at a premium (105 = $1,050 for a $1,000 par bond), yield to call is the lowest yield because the investor loses the premium faster if called early. The order for premium bonds: YTC < YTM < CY < Coupon.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
The coupon rate is the highest yield for a premium bond.
Current yield is between YTM and coupon rate for premium bonds.
YTM is between YTC and current yield for premium bonds.
Matches the verified teaching point in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.