ABC Ltd issues a bond with 10.12% coupon rate and semi-annual coupon. It is known that the
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Question:
ABC Ltd issues a bond with 10.12% coupon rate and semi-annual coupon. It is known that the yield to
maturity is 9.22%, and the face value for the bond is at $1000. However, as a potential investor, you do
not know the maturity for the bond.
a) Briefly explain whether the bond is currently trading at a discount, at par, or at a
premium. (6 marks)
b) If the time to maturity is 10 years, what is the bond price? (9 marks)
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