. Coug Inc. bonds are selling at par value with a coupon rate of 12 percent. The bonds will mature in 20 years. Coupons are paid annually. If prevailing interest rate (of similar companies) increases, then which of the following is correct? (4 Points)

I. coupon rate will increase.

II. yield to maturity will be lower than 10%.

III. current yield will be higher than the coupon rate.

IV. the bond will become a discount bond.

A. I only

B. I and II only

C. I and IV only

D. III and IV only

E. None of the above