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Suppose a seven-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading...

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Finance

Suppose a seven-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading with a yield to maturity of 6.55%.

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 7.11%

(APR with semiannual compounding), what price will the bond trade for?

b.) If the yield to maturity of the bond rises to 7.11% (APR with semiannual compounding), what price will the bond trade for? The new price of the bond is $___. (Round to the nearest cent.)

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