1.Assume that a bond with a maturity of 7 years and a par value of $1000 paying coupons every half year with a coupon rate of 8% is trading at a yield of 6.75%. a. Are these bonds currently trading at face value or at a discount or premium? Explain why. b. If the yield to maturity is 7.00% (half-year compound interest APR), what is the price of the bond?

2. Your company has a bond with a face value of $1000, an interest rate of 6% and a remaining maturity of 10 years, which is priced at $1078. If your company wants to issue new 10-year bonds at face value, what should be the interest rate? The next coupon payment date for both bonds is exactly six months from now.