7. A 10 year $1,000 par value bond with 8% semi annual coupons is callable anytime starting five years after issue. The bond matures at $1,100 at the end of ten years and is sold to yield a nominal rate of 6% compounded semi8annually under the assumption that the bond will not be called.

a.) Is this bond sold at a premium or discount?

b.) Calculate the lowest price that will yield a rate not less than i^2 = 10%.