A 5-year corporate bond paying an annual coupon of 8% is sold at a price reflecting a yield-to-maturity of 6% per year. One year passes and the interest rates remain unchanged. If the term structure is flat and all other factors is constant，the bond's price during this period will have:
A.  Increased.
B.  Decreased.
C.  Remained constant.
D.  Cannot be determined with the data given
Answer:B
Since, the bond is sold at a premium. As time passes, the bond price will move towards par. Hence the price will decrease.

 
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