Q6. Suppose a five-year $1000 bond with a 10% coupon rate and semi-annual coupons is trading with
a yield to maturity of 8.5%.
(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 9% (APR with semi-annual compounding), what
price will the bond trade for?