Suppose a seven-year 1000 bond with a 814 coupon rate and, Ask an Expert

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Suppose a seven-year, $1,000 bond with a 8.14% coupon rate and semiannual coupons is trading with a yield to maturity of 5.75%.

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 5.92% (APR with semiannual? compounding), at what price will the bond trade?

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 discount because the coupon rate is greater than the yield to maturity

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

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

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92856472

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