Suppose a

5-year,

$1,000 bond with a

5.91%

coupon rate and annual coupons is trading with a yield to maturity of

4.52%.

a. Is this bond currently trading at a discount, at par, or at a premuim? Explain.

b. If the yield to maturity of the bond rises to

4.71%

(with annual coupons), at what price will the bond trade?

Question content area bottom

Part 1

a. Is this bond currently trading at a discount, at par, or at a premuim? Explain.

The bond is currently trading...(Select the best choice below.)

A.

... at a premium because the coupon rate is greater than the yield to maturity

B.

... at a premium because the yield to maturity is greater than the coupon rate.

C.

... at par because the coupon rate is equal to the yield to maturity

D.

... at a discount because the coupon rate is greater than the yield to maturity

b. If the yield to maturity of the bond rises to

4.71%

(with annual coupons), at what price will the bond trade?

The bond will trade for

$enter your response here.

(Round to two decimal places.)