Two Bonds Are Identical in Risk, Maturity Date, and Face

question 115

Multiple Choice

Two bonds are identical in risk, maturity date, and face value, but one coupon rate is 10% and the other is 8%. The market yield on similar bonds is 9%.

• A)The 10% coupon bond would be selling at a premium and the 8% coupon bond would be selling at a discount.
• B)The 10% coupon bond would be selling at a discount and the 8% coupon bond would be selling at a premium.
• C)At the maturity date, both bonds would be selling at face value.
• D)a and c

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