Answer (C) is correct . The excess of the price over the face value is a premium. A premium is paid because the coupon rate on the bond is greater than the market rate of interest. In other words, because the bond is paying a higher rate than other similar bonds, its price is bid up by investors.
Answer (A) is incorrect because If a bond sells at a premium, the market rate of interest is less than the coupon rate.
Answer (B) is incorrect because A bond sells at a discount when the price is less than the face amount.
Answer (D) is incorrect because A bond sells at a discount when the price is less than the face amount.
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