Question: 2. A bond has the following information - Par value: $1,000 - Maturity: seven years - Coupon rate: 10.5% with semi-annual coupon payment - Yield

2. A bond has the following information - Par value: $1,000 - Maturity: seven years - Coupon rate: 10.5% with semi-annual coupon payment - Yield to maturity: 8.5% a) Is this bond currently trading at a discount, at par, or at a premium? Explain [0.75 marks]

b) If the YTM rises to 9%, at what price will the bond trade? [0.75marks]

Which formulas are to be used?

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