There is inverse relationship between interest rate changes in
the market price of outstanding bonds. This is due to inverse
relationship between bonds interest rate and marker price.
Bonds a debt instrument of the capital market. And market price
of the bond is totally depend on the coupon rate of the bonds and
rate of interest in the market. When the coupon rate of bond is
more than market rate of interest than the market value of the Bond
is greater than its par value. When the coupon rate of bond is the
less than its market rate than market price of the bond is less
than its par value
So as per the above, Bonds are selling at more than its par
value it means this are selling at premium.
Answer = Option 4 = The bonds are selling at a
premium