bonds

Doisneau 25​-year bonds have an annual coupon interest of 8 ​percent, make interest payments on a semiannual​ basis, and have a ​$1,000 par value. If the bonds are trading with a​market’s required yield to maturity of 13 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds?

If the bonds are trading with a yield to maturity of 13​%, then ​ (Select the best choice​ below.)

A.

the bonds should be selling at par because the​ bond’s coupon rate is equal to the yield to maturity of similar bonds.

B.

the bonds should be selling at a premium because the​ bond’s coupon rate is greater than the yield to maturity of similar bonds.

C.

the bonds should be selling at a discount because the​ bond’s coupon rate is less than the yield to maturity of similar bonds.

D.

there is not enough information to judge the value of the bonds.

 

"Looking for a Similar Assignment? Order now and Get 10% Discount! Use Code "Newclient"