Assume a 10-year Treasury bond has a coupon rate of 4.2%.

a.Give examples of required rates of return that would make the bond sell at a discount, at a premium, and at par.

b.If this bond's par value is $5,000, calculate the differing values for this bond given the required rates you choose in part a.

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Part 1

a. At what rate would the bond sell at a discount? (Select the best answer below.)

A. 2.5%

B. 4.2%

C. 6.6%