Question: In each of the following situations, indicate whether the bonds would be sold at the face amount, at a premium, or at a discount: a.

In each of the following situations, indicate whether the bonds would be sold at the face amount, at a premium, or at a discount:

a. A $1,000 bond with 20-year maturity. Interest coupons attached, each in the amount of $120, are payable annually. The market rate of interest is 14 percent, compounded annually.

b. A $1,000 bond with ten-year maturity. Interest coupons attached, each in the amount of $140, are payable at 12-month intervals. The market rate of interest is 14 percent, compounded annually.

c. A $1,000 bond due in five years. Interest coupons attached, each in the amount of $150, are payable annually. The market rate of interest is 14 percent, compounded annually.

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