Suppose a seven-year, $1,000 bond with a 7.8% coupon rate and semiannual coupons is trading with a yield to maturity of 6.61%.
a) is this bond currently trading at a discount, a par, or at a premium? Explain.
b)if the yield to maturity of the bond rises to 7.32% (APR with semiannual compounding), what price will the bond trade for?