#4

Suppose a seven-year, $1,000 bond with a 9.75% coupon rate and semiannual coupons is trading with a yield to maturity of 7.92%. a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. b. If the yield to maturity of the bond rises to 8.04% (APR with semiannual compounding), at what price will the bond trade? a. Is this bond currently trading at a discount, at par, or at a premuim? Explain. The bond is currently trading... (Select the best choice below.) A. at a discount because the coupon rate is greater than the yield to maturity B. . at a premium because the yield to maturity is greater than the coupon rate. C. - at par because the coupon rate is equal to the yield to maturity D. - at a premium because the coupon rate is greater than the yield to maturity b. If the yield to maturity of the bond rises to 8.04% (APR with semiannual compounding). at what price will the bond trade? The bond will trade for 3 (Round to two decimal places.)