Complete the following table by identifying the appropriate corresponding variables used in the equation.

Unknown

Variable Name

Variable Value

A Bond$$s semiannual coupon payment $$37\mathrm{.}50$

B Bond$$s par value $$1,000$

C Semiannual required return $4\mathrm{.}50\%$

Based on this equation and the data, it isreasonable to expect that Ella$$s potential bond investment will exhibit an intrinsic value less than $$1,000.$

Now, consider the situation in which Ella wants to earn a return of $6\%,$ but the bond being considered for purchase offers a coupon rate of $8\%.$ Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the bond's intrinsic value to the nearest whole dollar, then its intrinsic value of$\_\_\_\_\_$ is $\_\_\_\_\_$ its par value, so that the bond is trading at$\_\_\_\_\_\_\_\_\_\_\_\_.$

Given your computation and conclusions, which of the following statements is true?

When the coupon rate is greater than Ella$$s required return, the bond should trade at a discount.

A bond should trade at a par when the coupon rate is greater than Ella$$s required return.

When the coupon rate is greater than Ella$$s required return, the bond should trade at a premium.

When the coupon rate is greater than Ella$$s required return, the bond$$s intrinsic value will be less than its par value.