Green Roof Inns is preparing a bond offering with a 6 percent, semiannual coupon and a face value of $1,000

Green Roof Inns is preparing a bond offering with a 6 percent, semiannual coupon and a face value of $1,000. The bonds will be repaid in 10 years and will be sold at par. Given this, which one of the following statements is correct?    A.  The bonds will become discount bonds if the market rate of interest declines. B.  The bonds will pay 10 interest payments of $60 each. C.  The bonds will sell at a premium if the market rate is 5.5 percent. D.  The bonds will initially sell for $1,030 each. E.  The final payment will be in the amount of $1,060. Refer to section 7.1

42.

A newly issued bond has a 7 percent coupon with semiannual interest payments. The bonds are currently priced at par value. The effective annual rate provided by these bonds must be:    A.  3.5 percent. B.  greater than 3.5 percent but less than 7 percent. C.  7 percent. D.  greater than 7 percent. E.  Answer cannot be determined from the information provided. Refer to section 7.1

43.

Which of the following increase the price sensitivity of a bond to changes in interest rates? I. increase in time to maturity II. decrease in time to maturity III. increase in coupon rate IV. decrease in coupon rate    A.  II only B.  I and III only C.  I and IV only D.  II and III only E.  II and IV only Refer to section 7.1