2. A bond pays a coupon of $100. If the current market interest rate is 15%,...

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2. A bond pays a coupon of $100. If the current market interest rate is 15%, then the bond will sell at a 2. If the market in

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Answer 1

Answer #1

2. C) discount, premium

When the market rate is greater than the coupon rate, the bond will be in less demand and will thus sell at a lower rate.

3. A) 5.44%

=0.5%+3.8*1.3%

4. A) Replacement of managment

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Answer 2

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