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Suppose a seven-year, $1,000 bond with a 10.54% coupon rate and semiannual coupons is trading with a yield to maturity of 8.75%. a. Is this

Suppose a seven-year, $1,000 bond with a

10.54%

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

8.75%.

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

9.24%

(APR with semiannual compounding), at what price will the bond trade?

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