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1. A corporation issued bonds 30 years ago. At that time, the coupon rate was set at 12.3%. Today, the bonds yield to maturity (YTM)

1. A corporation issued bonds 30 years ago. At that time, the coupon rate was set at 12.3%. Today, the bonds yield to maturity (YTM) is 8.7%.

a. Explain the difference between the coupon rate and the YTM. Be sure to discuss each item in your response.

b. What does the fact that the YTM is different than the coupon rate indicate about the coupon rate the corporation would need to pay if it issued the bond today instead of 30 years ago?

c. Is this a premium bond or a discount bond? Why?

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