Question: Consider a bond that has a $1000 face value, a 6.875% coupon rate, and pays interest semiannually. The bond has ten years remaining until maturity.

  1. Consider a bond that has a $1000 face value, a 6.875% coupon rate, and pays interest semiannually. The bond has ten years remaining until maturity. The current price reflects an 8.125% required annual return to investors. Which of the following statements concerning this bond is true?

a. The bond will sell at a discount.

b. The bond will sell for exactly par value.

c. The bond will sell at a premium.

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