Question: Amy purchased a 15-year bond at par value when it was initially issued five years ago. The bond has an annual coupon rate of 4.25%

Amy purchased a 15-year bond at par value when it was initially issued five years ago. The bond has an annual coupon rate of 4.25% and a par value of $1000. The current market interest rate (yield to maturity) is 6%. At the current market interest rate, this bond will sell at _______. Assuming no change in market interest rates, the bond will present the Amy with capital ________ as it matures.

a. premium; gains

b. premium; losses

c. discount; gains

d. discount; losses

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