单选题
An analyst gathered the following information about spot rates and a
coupon bond (all rates are annual) issued by Farrili Corporation:
Spot rate, six-month aero coupon bond
7.0%
Spot rate, one-year
zero coupon bond
8.0%
One year risk-free rate
6%
Price for one-year, 9% coupon
bond
$1010
(semiannual payments, par value $1000)
Using the arbitrage-freed approach to valuing bonds, the coupon bond is:
- A. overvalued.
- B. properly valued.
- C. undervalued.