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A six-year, $1,000 bond with a 4% coupon rate and semi-annual coupons is trading with a YTM of 5.75%. Required: (show your work). Part a)
A six-year, $1,000 bond with a 4% coupon rate and semi-annual coupons is trading with a YTM of 5.75%. Required: (show your work). Part a) Is this bond currently trading at a discount or premium? Explain. (2 points). Part b) By how much will the price of the bond change four years from today if the bonds YTM remains unchanged? Why has the price changed? (4 points).
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