Question: Consider a coupon paying bond. Lets say par value is $1000, and this bond was issued at a premium to par in 1990. In other

Consider a coupon paying bond. Lets say par value is $1000, and this bond was issued at a premium to par in 1990. In other words, it was issued as a premium bond. It matured in 2020. Lets assume investors required return (i.e. yield to maturity) for this bond never changed. Suppose you were to graph the price of the bond during the period 1990-2020, with price on the vertical axis and time on the horizontal axis. The graph would look like:

a) a horizontal line at a price of $1000

b) a downward sloping curve, reflecting a decreasing price over time

c) an upward sloping curve, reflecting an increasing price over time

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