• A nine year AA rated corporate bond with a $70 annual coupon and a $1000 par value sells at a discount to par. What happens to the bonds coupon rate if the market yield on comparable debt drops from 7.2% to 6.8%?
  • The coupon rate increases to 6.8%
  • The coupon rate remains at 7.0%
  • The coupon rate decreases to 7.2%
  • The coupon rate increases to 7.4%
  • Noneoftheabove.

Please show calculations