Question: Answer all multiple-choice questions by clearly marking your answer. Assume all bonds are semi-annual pay, have whole years to maturity, and have face (or principal

Answer all multiple-choice questions by clearly marking your answer. Assume all bonds are semi-annual pay, have whole years to maturity, and have face (or principal values) of $1000.

2. You have been offered a corporate bond trading at 112.75. If the face value of the bond is $1000, what can you assume has happened since the bond was first issued?

a. Interest rates rose, and the price of the bond decreased creating a discount.

b. Interest rates rose, and the price of the bond increased creating a premium.

c. Interest rates declined, and the price of the bond increased creating a premium.

d. Interest rates declined, and the price of the bond declined creating a discount.

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