There is a consistent and predictable relationship between a bond's coupon rate, its par value, a bondholder's required return, and the bond's resulting intrinsic value. Trading at a discount, trading at a premium, and trading at par refer to particular relationships between a bond's intrinsic value and its par value. This also results from the relationship between a bond's coupon rate and a bondholder's required rate of return. Remember, a bond's coupon rate partially determines the interest-based return that a bond reflects the return that a bondholder to recelve from a given investment. pay, and a bondholder's required return The mathematics of bond valuation imply a predictable relationship between the bond's coupon rate, the bondholder's required return, the band's par value, and its intrinsic value. These relationships can be summarized as follows: When the bond's coupon rate is equal to the bondholder's required return, the bond's intrinsic value will equal its par value, and the band will trade at par . When the bond's coupon rate is greater than the bondholder's required return, the bond's intrinsic value will its par value, and the bond will trade at a premium. When the bond's coupon rate is less than the bondholder's required return, the bond's intrinsic value will be less than its par value, and the bond will trade at 125 offered the opportunity to irchase a su non nar value hond that pays a 13.50 x For example, assume Noah wants to earn a return of 15.75% and is offered the opportunity to purchase a $1,000 per value band that pays a 13.50% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value: Intrinsic Value C.COM (1.c + (107*+ + (1.0)" + + (tech 1cy Complete the following table by identifying the appropriate corresponding variables used in the equation, Unknown Variable Name Variable Value A B $1,000 Semiannual required return to expect that Noah's potential bond Investment is currently exhibiting an intrinsic value Based on this equation and the data, it is greater than $1,000. Based on this equation and the data, it is greater than $1,000. to expect that Noah's potential bond investment is currently exhibiting an intrinsic value Now, consider the situation in which Noah wants to earn a return of 11.50%, but the bond being considered for purchase offers a coupon rate of 13.50%. 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 (rounded to the nearest whole dollar) its par value, so that the bond is Given your computation and conclusions, which of the following statements is true? When the coupon rate is greater than Noah's required return, the bond should trade at a premium. When the coupon rate is greater than Noah's required return, the bond should trade at a discount. When the coupon rate is greater than Noah's required return, the bond's intrinsic value will be less than its par value. A bond should trade at a par when the coupon rate is greater than Noah's required return