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.