Suppose a seven-year, $1,000 bond with a 7.48% coupon rate and semiannual coupons is trading with a yield to maturity of 5.80%.

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

b. If the yield to maturity of the bond rises to 6.12% (APR with semiannual compounding), at what price will the bond trade?

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

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

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

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

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

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