QUESTION 19:

Bond	Par value	Annual Coupon	Maturity	Market Price (when r=10%)
A	100	20%	2	125
B	100	6%	4	95
C	100	10%	8	132
D	100	12%	6	122
E	100	4%	12	85

Required:

From the above table which bond(s) is/are:

a. Premium bond:

b. Discount bond:

c. Overvalued:

d. Undervalued:

e. more likely to show the greatest price sensitivity:

f. less likely to show the lowest price sensitivity: