Assume the zero-coupon yields on default-free securities are as summarized in the following table: (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) Zero-coupon YTM 4.00% 2 4.30% 13 4.50% 4 4.70% 5 4.80% Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1,000. a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain. b. What is the yield to maturity on this bond? c. If the yield to maturity on this bond increased to 5.20%, what would the new price be? a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain. The bond is trading at a premium because its yield to maturity is a weighted average of the yields of the zero-coupon bonds. (Select from the drop-down menu.) b. What is the yield to maturity on this bond? The yield to maturity on this bond is%. (Round to three decimal places.)

Assume the zero-coupon yields on default-free securities are as summarized in the following table: (Click on the following icon in order to copy its contents into a spreadsheet.) Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1,000. a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain. b. What is the yield to maturity on this bond? c. If the yield to maturity on this bond increased to 5.20%, what would the new price be? a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain The bond is trading at because its yield to maturity is a weighted average of the yields of the zero-coupon bonds. (Select from the drop-down menu) b. What is the yield to maturity on this bond? The yield to maturity on this bond is %. (Round to three decimal places.)