Question $4,$ Problem $6-15$

HW Score: $62\mathrm{.}5\%,7.$

Part $2$ of $2$

Points: $0\mathrm{.}5$ of $1$

Suppose a seven$-$year, $$1,000$ bond with an $8\mathrm{.}5\%$ coupon rate and semi$-$annual coupons is trading with a yield to maturity of $6\mathrm{.}73\%.$

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 $7\mathrm{.}29\%($APR with semi$-$annual compounding$),$ what price will the bond trade for?

a$.$ Is this bond currently trading at a discount, at par, or at a premium? Explain. $($Select the best choice below.$)$

A$.$ Because the yield to maturity is greater than the coupon rate, the bond is trading at a premium.

B$.$ Because the yield to maturity is greater than the coupon rate, the bond is trading at par.

C$.$ Because the yield to maturity is less than the coupon rate, the bond is trading at a discount.

D$.$ Because the yield to maturity is less than the coupon rate, the bond is trading at a premium.

b$.$ If the yield to maturity of the bond rises to $7\mathrm{.}29\%($APR with semi$-$annual compounding$),$ what price will the bond trade for?

The new price of the bond will be $ $($Round to the nearest cent.$)$