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(Related to Checkpoint 9.3) (Bond valuation) Doisneau 15-year bonds have an annual coupon interest of 8 percent, make interest payments on a.

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(Related to Checkpoint 9.3) (Bond valuation) Doisneau 15-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual basis, and have a $1000 par value. If the bonds are trading with a market’s required yield to maturity of 16 percent, are these premium or discount bonds? Explain your answer. What is the price of the bonds?

A. the bonds should be selling at par because the bond’s coupon rate is equal to the yield to

maturity of similar bonds.

B. the bonds should be selling at a Premiun because the bond’s coupon rate is greater than the

yield to maturity of similar bonds.

C. there is not enough information to judge the value of the bonds.

D. the bonds should be selling at a discount because the bond’s coupon rate is less than the yield

to maturity of similar bonds.

b. The price of the bonds is $ . (Round to the nearest cent.)

 
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