Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with…

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Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.54%.

– Is this bond currently trading at a discount, at par, or at a premium? Explain.

-. If the yield to maturity of the bond rises to 7.37% (APR with semiannual compounding), what price will the bond trade for?

– . Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best choice below.)

•Because the yield to maturity is greater than the coupon rate, the bond is trading at par.

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

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

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

– If the yield to maturity of the bond rises to 7.37% (APR with semiannual compounding), what price will the bond trade for? The new price of the bond is $0. (Round to the nearest cent.)

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