Question

Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with...

Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield

to maturity of 6.75%.

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

Answer ___________________________________________________________

b.If the yield to maturity of the bond rises to 7.00% (APR with semiannual compounding), what

price will the bond trade for?

Answer ______________________

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