Equinox Corp issued a 4% bond four years ago at par value. The market interest rate on comparable bonds today is 3.5%.

1) This bond sells at a discount and the coupon rate is higher than the yield.

2) This bond sells at a premium and the coupon rate is lower than the yield.

3) This bond sells at a discount and the coupon rate is lower than the yield.

4) This bond sells at a premium and the coupon rate is higher than the yield.

Explain your answer