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The Rapture Marine Corporation has $1,000 face value bonds issued with a 7.40% coupon. They mature...

The Rapture Marine Corporation has $1,000 face value bonds issued with a 7.40% coupon. They mature in 9 years and call for semi-annual payments and currently have a yield to maturity of 5.5%. What will happen to the price of the bond if the market interest rate suddenly increases to 10%?

Select one:

The bond price will decrease but still trade at a premium

The bond price will increase and trade at a premium

The bond price will increase but still trade at a discount.

The bond price will decrease and trade at a discount

The bond price will remain unchanged

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