A 12-year bond has an annual coupon rate of 9%. The par value of the bond is $1,000 and the bond has a yield to maturity of 7%. Which of the following statements is correct?

Question 8 options:

	If the market interest rate declines, the price of the bond will also decline.
	The bond is currently selling at a price below its par value.
	The bond is currently selling at a price above its par value.
	The bond is currently selling at its par value.

6. Assume that interest rates on 30-year Treasury and corporate bonds with different ratings, all of which are non-callable, are as follows:

Treasury bond: 7.72%

Corporate bond (AA rating): 8.72%

Corporate bond (A rating): 9.64%

Corporate bond (BBB rating): 10.18%

The differences in interest rates among these issues were most probably caused primarily by _______.

Question 6 options:

	real risk-free rate differences
	tax effects
	default risk differences
	maturity risk differences