Suppose a $7-$year, $$$$1000$ bond with a coupon rate of $8\%$ and semiannual coupons is trading with a yield to maturity of $6\mathrm{.}75\%.$

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 $7\mathrm{.}00\%($APR with semiannual$$ compounding$),$ at what price will the bond$$ trade?

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Part $1$

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 yield to maturity is greater than the coupon rate.

B$.$

at par because the coupon rate is equal to the yield to maturity.

C$.$

at a discount because the coupon rate is greater than the yield to maturity.

D$.$

at a premium because the coupon rate is greater than the yield to maturity.