Question: What happen when coupon on the bond is less than the required yield?
Answer: In this case price has to go below, because when yield increases the bond price reduces. So we can say bond should be priced below par value.
Question: What do you mean by bond is being sold at premium?
Answer: Suppose your required yield is less than the coupon rate on the bond. Then in this case bond price would be more than par value. It means bond is giving much more yield in reality. Hence, bond price would be adjusted upward and this is called bond is selling at premium. Because its price is more than par value.
Question: Why do you see bond price is higher than par value?
Answer: Because, bond coupon rate looks higher than required yield by investor.
Question: What would happen when you buy a bond either on premium or discount and required yield does not changes. And it is reaching towards maturity?
Answer: If bond purchased on - Discount: Then its price would increase as it reaches towards the maturity and required yield does not changes. - Premium: In this case price would decrease as this moves towards the maturity. - Par value: If bond is purchased on par value and required yield and coupon rate does not change then price of the bond also remain equal to the par value as move towards the maturity.