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When pricing bonds if a bond''s coupon rate is less than

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Reference no: EM132653360

Problem 1: When pricing bonds, if a bond's coupon rate is less than the required rate of return, then:

a. The holder of the bond is assured of a profit regardless of when the bond is eventually sold.

b. The holder of the bond will realize a capital gain if the bond is held to maturity.

c. The bond sells at par because the required rate of return is adjusted to reflect the discrepancy.

d. The bond sells at a premium if it has a long maturity, a discount if it has a short maturity.

e. The bond sells at a discount if it has a long maturity, a premium if it has a short maturity.

Reference no: EM132653360

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