When the market rate is less than the coupon rate

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Reference no: EM131870819

1. When the market rate is less than the coupon rate, the bond sells _____.

for a fixed price that is relevant to the market rate.

at a premium.

at a discount off the par.

for the par value.

2. You are looking for a new truck and see the following advertisement. "Own a new truck! No money down. Just five easy annual payments of $8000." You know that you can get the same truck from the dealer across town for only $31,120. The interest rate for the deal advertised is closest to:

A) 8.5% B) 8% C) 9% D) 10%

Reference no: EM131870819

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