Assume That the Microsoft Bonds Have 5-Years to Maturity and Pay

Assume that the Microsoft bonds have 5-years to maturity and pay annual coupons of $100.The next coupon is due in one year.The yield on equivalently risky corporate bonds is currently 15%.Assume the yield stays at 15% over the life of the bond.Determine the price of the bond today and after each of the first four coupon payments.Plot those prices on a graph with price on the y-axis and time on the x-axis.(The x-axis starts at time 0 and ends on the date of the fourth coupon.) What do you note about the time path (slope of the line) of the bond price?

A) It is upward sloping.
B) It is downward sloping.
C) It is a horizontal line.