Which letter choices are correct?

American Fortunes is preparing a bond offering with an 8% coupon rate. The bonds will be repaid in 10 years. The company plans to issue the bonds at par value and pay interest semiannually. Given this, which of the following statements are correct?

I. The initial selling price of each bond will be $1,000.

II. After the bonds have been outstanding for one year, you should use nine as the number of compounding periods when calculating the market value of the bond.

III. Each interest payment per bond will be $40.

IV. The yield to maturity when the bonds are first issued is 8%.

Select one:

a. I and II

b. II and III

c. II, III, and IV

d. I, II, and III

e. I, III, and IV

The Lo Sun Corporation offers a 6% bond with a current market price of $875.05. The yield to maturity is 7.34%. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?

Select one:

a. 16

b. 18

c. 24

d. 30

e. 32

A bond with semi-annual interest payments, all else equal, would be priced _________ than one with annual interest payments.

Select one:

a. Higher

b. Lower

c. The same

d. It is impossible to tell

e. Either higher or the same