Homework Answers
Answer:
Option C i.e. “The Bond sells at a discount” is Correct.
The Bond has a Yield of Maturity of 10.5% which is higher than the Annual Coupon rate of 10%, therefore the Bond is selling at discount.
When the Yield to Maturity equal to Coupon rate, the bond trades at par; whereas When the Yield to Maturity is less than the Coupon rate, the bond trades at premium.
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