1. Hot Foods Inc. bonds are selling at par value with a coupon rate of 6 percent. The bonds will mature in 10 years. Coupons are paid annually. If prevailing interest rate (of similar companies) increases, then which of the following is correct?

   I. coupon rate will not change.

   II. market price of the bond will increase.

   III. current yield will increase.

   IV. yield to maturity will be lower than the coupon rate.

   	A.	II only
   	B.	II and III only
   	C.	I and III only
   	D.	II, III and IV only