What is the current price of the bond

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Reference no: EM131300075

XYZ Corporation issued a 30 year, 7% annual coupon bond five years ago. The current yield to maturity of bonds with similar risk is 6% annually. Assume that the bond was issued at par value ($1,000).

a) What is the current price of the bond? Is it trading at a premium, discount or at par?

b) Suppose that interest rates rose to 8% annually, what is the new price of the bond? Is it trading at a premium, discount or at par?

c) Suppose that interest rates rose to 7% annually, what is the new price of the bond? Is it trading at a premium, discount or at par?

Reference no: EM131300075

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