​(Bond valuation) Doisneau
18​-year
bonds have an annual coupon interest of
11
​percent, make interest payments on a semiannual​ basis, and have a
​$1,000
par value. If the bonds are trading with a​ market's required yield to maturity of
12
​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds?
Question content area bottom
Part 1
a. If the bonds are trading with a yield to maturity of
12​%,
then ​ (Select the best choice​ below.)
A.
there is not enough information to judge the value of the bonds.
B.the bonds should be selling at a
discount
because the​ bond's coupon rate is
less
than the yield to maturity of similar bonds.Your answer is correct.
C.
the bonds should be selling at par because the​ bond's coupon rate is equal to the yield to maturity of similar bonds.
D.the bonds should be selling at a
premium
because the​ bond's coupon rate is
greater
than the yield to maturity of similar bonds.
Part 2
b. The price of the bonds is
​$enter your response here.
​ (Round to the nearest​ cent.)