Consider two types of bonds with the face value of $100 issued by the same company, at the same date: the first type of bond is a three-year zero-coupon bond, and the second one is a three-year 5% coupon bond. Which of these bonds will have a lower price?

a.

It depends on the riskiness of the company.

b.

The three-year 5% coupon bond.

c.

The three-year zero-coupon bond.

d.

Since they are issued by the same company the bonds will have the same price.