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A Bond with an Annual Coupon of $100 Originally Sold

Question 66

Multiple Choice

A bond with an annual coupon of $100 originally sold at par for $1,000.The current yield to maturity on this bond is 9%.Assuming no change in risk,this bond would sell at a ________ in order to compensate ________.


A) discount; the issuer for the higher cost of borrowing
B) discount; the seller for the above market coupon rate
C) premium; the seller for the above market coupon rate
D) premium; the purchaser for the above market coupon rate
E) discount; the purchaser for the above market coupon rate

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