Use the following information to answer the question(s)below.Consider the following four corporate bonds that have semiannual compounding:
-Which of these bonds sells at a discount?
A)#1
B)#2
C)#3
D)#4

Question

Use the following information to answer the question(s)below.Consider the following four corporate bonds that have semiannual compounding: 
-Which of these bonds sells at a discount?
A)#1 
B)#2 
C)#3 
D)#4

Quizplus · Accepted Answer

Bond #2 has a yield to maturity of 8.5%, which is higher than the coupon rate of 6%. This indicates that the bond is selling at a discount. The other bonds have yield to maturity rates that are lower than their coupon rates, indicating that they are selling at a premium.

Use the Following Information to Answer the Question(s)below