Should the bonds below trade at a premium or discount if the yield is 8%?

Interview Question: Should the bonds below trade at a premium or discount if the yield is 8%?

Answer:

Bond 1) Pays a 10% coupon –> Bond will trade at a premium (above $100) since the coupon > yield

Bond 2) Pays a 5% coupon –> Bond will trade at a discount (below $100) since the coupon < yield

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