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What price will the bond trade for

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Question - Suppose that General Motors Acceptance Corporation issued a bond with ten years until maturity, a face value of $1000, and a coupon rate of 7% (semiannual payments). The yield to maturity on this bond when it was issued was 6%.

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 9% (APR with semiannual compounding), what price will the bond trade for?

Reference no: EM133174610

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