7)
The prices of several bonds with face values of $1,000 are summarized in the following table:

A 
B 
C 
D 
Price 
$905.72 
$057.48 
$1,179.66 
$1,000.00 
For each bond, provide an answer for whether it trades at a discount, at par, or at a premium. Bond A trades at (a).?
Is it Discount, Par Or Premium? (Select from the dropdown menu.)
5)
Suppose a 10year, $1,000 bond with a 12% coupon rate and semiannual coupons are trading for a price of $1,014.76.
a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)?
b. If the bond's yield to maturity changes to 10%
APR, what will the bond's price be?
a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)?
The YTM is %. (Round to two decimal places.)
8)
Suppose a sevenyear, $1,000 bond with a 10.96% coupon rate and semiannual coupons is trading with a yield to maturity of 8.00%.
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 8.73%
(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 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 discount because the coupon rate is greater than the yield to maturity
C.... at a premium because the yield to maturity is greater than the coupon rate.
D.... at par because the coupon rate is equal to the yield to maturity
7.
When a bond is trading below the face value, it is said to be discount. When a bond is trading above the face value, it is said to be trading at premium. When a bond is trading at same as face value, it is said to be trading at par.
So, Bond A & B are trading at discount, while Bond C is trading at premium, and Bond D is trading at par.
5.
a.
From the given information,
Bond price, PV = 1014.76
Coupon, PMT = 0.12*1000/2 = 60
Term, N = 10*2 = 20
Face value, FV = 1000
YTM, R = ?
Using excel function, R = Rate(N,PMT,PV,FV)
Rate(20,60,1014.76,1000) = 0.0587 = 5.87% semi annually
YTM = 5.87%*2 = 11.75% Annually
b.
If YTM = 10%
R = 10%/2 = 5% semi annually
PV = PV(R,N,PMT,PV)
PV(0.05,20,60,1000) = 1124.62
Bond price = $1124.62
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