Suppose a seven-year, $1000 bond with a 9.08% coupon rate and semiannual coupons is trading with a
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Suppose a seven-year, $1000 bond with a 9.08% coupon rate and semiannual coupons is trading with a yield to maturity of 7.30%.
a. Is this bond currently trading at a discount, at par, or at a premium? Explain.
b. If the yield to maturity of the bond rises to 8.25% (APR with semiannual compounding), what price will the bond trade for?
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