Suppose a 7-year, $1,000 bond with a coupon rate of 9% and semiannual coupons is trading with a yield to maturity of 7.55%.
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 7.85% (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 premium? Explain.