Benjamin has to make a choice between two bonds. Bond W makes semi-annual payments. has a maturity of five years and a coupon rate of 12.5%. Bond X has a maturity of six years and a coupon rate of 12.2%. The par value of each bond is R 15 000 and the interest rate is 12.35%. Which bond is trading at premium and which is trading at a discount?

1. Bond W: Discount: Bond X: Premium

2. Bond W: Premium: Bond X: Premium

3. Bond W: Premium: Bond X: Discount

4. Bond W: Discount; Bond X: Discount

Answer rating: 100% (QA)

It is possible to determine if a bond is trading at a discount or premium by just comparing th... View the full answer