A bond has the following information - Par value: $1,000 - Maturity: seven years - Coupon rate: 10.5% with semi-annual coupon payment - Yield to maturity: 8.5% a) Is this bond currently trading at a discount, at par, or at a premium? Explain b) If the YTM rises to 9%, at what price will the bond trade?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
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a and b please

A bond has the following information
Par value: $1,000
Maturity: seven years
Coupon rate: 10.5% with semi-annual coupon payment
Yield to maturity: 8.5%
a) Is this bond currently trading at a discount, at par, or at a premium? Explain
b) If the YTM rises to 9%, at what price will the bond trade?
Transcribed Image Text:A bond has the following information Par value: $1,000 Maturity: seven years Coupon rate: 10.5% with semi-annual coupon payment Yield to maturity: 8.5% a) Is this bond currently trading at a discount, at par, or at a premium? Explain b) If the YTM rises to 9%, at what price will the bond trade?
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