A four-year corporate bond with a 7% coupon has a Z-spread of 200 bps. Assume a flat yield curve with an interest rate for all maturities of 5% and annual compounding. The bond will most likely sell:

A. close to par.

B. at a premium to par.

C. at a discount to par.

A one-year zero-coupon bond yields 4.0%. Th e two- and three-year zero-coupon bonds yield 5.0% and 6.0%, respectively.