Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with...
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Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.62%. 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 7.39% (APR with semiannual compounding), what price will the bond trade for? Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.62%. 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 7.39% (APR with semiannual compounding), what price will the bond trade for?
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