9. If a bond is selling at a premium, that is, the bond's current market price is greater than its par value, and the bond's required return is not expected to change, then the bond's price should be expected to decline to a lower price next year, and therefore its capital gain rate will be negative. A. TRUE B. FALSE 10. A bond has a $1,000 par value, makes annual interest payments of $100, has 5 years to maturity, cannot be called, and is not expected to default. The bond should sell at a premium if market interest rates are below 10% and at a discount if interest rates are greater than 10%. A. True B. False 11. Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $85.00. The market requires an interest rate of 6.3% on these bonds. What is the bond's price? A. $ 897.73 B. $ 978.29 C. $1,000.00 D. $1,135.01 E. $1,280.93 12. Suppose the U.S. Treasury issued $750 billion of short-term securities and sold them to the public. Other things held constant, what would be the most likely effect on short-term securities' prices and interest rates? A. Prices and interest rates would both rise. B. Prices would rise and interest rates would decline. C. Prices and interest rates would both decline. D. Prices would decline and interest rates would rise. E. There is no reason to expect a change in either prices or interest rates.