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When the market interest rate rises above the coupon rate for a particular quality of bond,...

When the market interest rate rises above the coupon rate for a particular quality of bond, the "current yield:"

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Answer #1

Current yield is a ratio of coupon amount and current market price of bond in percentage.

Coupon amount is fixed but market price of bond is dependent on market interest rate. Price of bond and market interest rate is inversely related which means if interest rate fall then price of bond increases and vice versa.

In above case, market interest rate rises the coupon rate which current price of bond reduces below its par value.

And thus, Current yield increased and it would be more than coupon rate of the bond.

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