For example, assume Noah wants to earn a return of 8.00% and is offered the opportunity to purchase a $1,000 par value bond that pays a 14.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bond's intrinsic value A A A A A A Intrinsic Value + (1+C)2 + (1+C)3 + + + + (1+C) (1+C)5 (1+C)6 (1+C)5 (1+C) Complete the following table by identifying the appropriate corresponding variables used in the equation Variable Name Variable Value Unknown Bond's semiannual coupon payment $70.00 A Bond's par value $1,000 C Semiannual required return 4.0000% Based on this equation and the data, it is unreasonable to expect that Noah's potential bond investment is currently exhibiting an intrinsic value greater than $1,000. Now, consider the situation in which Noah wants to earn a return of 12.00%, but the bond being considered for purchase offers a coupon rate of 14.00%. Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the bond's intrinsic value to $1,049 the nearest whole dollar, then its intrinsic value of (rounded to the nearest whole dollar) is greater than its par value, so that the bond is trading at a discount Given your computation and conclusions, which of the following statements is true? A bond should trade at a par when the coupon rate is greater than Noah's required return. When the coupon rate is greater than Noah's required return, the bond should trade at a premium. When the coupon rate is greater than Noah's required return, the bond should trade at a discount. When the coupon rate is greater than Noah's required return, the bond's intrinsic value will be less than its par value