Bonds sell at a discount off the par value when market yield to maturity for the bond is:

Select one:

A. less than the bond's coupon rate.

B. greater than the bond's coupon rate.

C. equal to the bond's coupon rate.

D. Market rates are irrelevant in determining a bond's price.

Suppose an investor earned a yield of 4.7 percent p.a on a bond paying coupons twice a year. What is the effective annual yield (EAY) on this investment? (answer as a percentage rounded to two decimal places without % sign. eg 2.889% would be written 2.89)

The Australian Treasury has issued 10-year zero coupon bonds with a face value of $1,000. Assume that coupon payments are normally semiannual. What will be the current market price of these bonds if the YTM for similar investments in the market is 6.25 percent? (Round to the nearest dollar.)

Select one:

A. $684

B. $660

C. $540

D. $545