Response to the following problem:
A $1,000-face-value bond has a current market price of $935, an 8 percent coupon rate, and 10 years remaining until maturity. Interest payments are made semiannually. Before you do any calculations, decide whether the yield to maturity is above or below the coupon rate. Why?
a. What is the implied market-determined semiannual discount rate (i.e., semiannual yield to maturity) on this bond?
b. Using your answer to Part (a), what is the bond's (i) (nominal annual) yield to maturity? (ii) (effective annual) yield to maturity?