Question 7 The following setup is used for question #7 to #9. Suppose Brandon ha

Question

Question 7 The following setup is used for question #7 to #9. Suppose Brandon has a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons. If the bond's yield to maturity is 6.75% today, then this bond is trading O A.at a discount O B.at par C.at a premium D.cannot determine the bond's current price Question 8 Suppose we don't know the bond's yield to maturity; but, we know that the bond is trading at par today. What is the bond's yield to maturity (in percentage)? Answer: 96 Question 9 If the bond's yield-to-maturity is greater than 8% today, then it is trading .at a discount B.at par .at a premium

Explanation / Answer

C. at a premium since the yield is less than coupon rate

8.00%

At a discount

N = 18*2, FV = 1000, PV = -1050, PMT = 53/2

use rate funciton in Excel and multiply by 2

APR = 4.88%

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