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a. Question 1 (13 Marks) Pepperoni Food Corporation has just issued a 10-years with a face value of $1,000, 12% semi-annual coupon bond. The yield-to-maturity

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a. Question 1 (13 Marks) Pepperoni Food Corporation has just issued a 10-years with a face value of $1,000, 12% semi-annual coupon bond. The yield-to-maturity (YTM) on this bond is 14% compounded semi-annually. Based on bond properties, determine whether this bond is currently trading at a discount, at par or at a premium. Explain your answers. 3 marks b. Find the current price of this bond. Show all your calculations. 5 marks If the yield-to-maturity (YTM) on this bond remains constant, what will be the bond price in four years. Show all your calculations. 5 marks c

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