Suppose a$$ seven$-$year, $ $1$ comma $000$ bond with a $7\mathrm{.}6\%$ coupon rate and$$ semi$-$annual coupons is trading with a yield to maturity of $6\mathrm{.}39\%.$

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 $7\mathrm{.}42\%($APR with$$ semi$-$annual compounding$),$ what price will the bond trade$$ for?

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Part $1$

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 par.

B$.$

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

Your answer is not correct.C$.$

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

D$.$

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

This is the correct answer.

Part $2$

b$.$ If the yield to maturity of the bond rises to $7\mathrm{.}42\%($APR with$$ semi$-$annual compounding$),$ what price will the bond trade$$ for?