A 12 year bond has 8 years left to maturity and its coupon rate is 8%, with interest paid semi-annually. Consider each of the following situations separately.
If the required return on this bond (the current market rate for similar bonds) is 6%, will this bond sell for a premium or a discount (no calculations are needed)?
What is the bond’s current price if the market rate is 4.5%?
If the bond is currently quoted at $939.50 in the market, what is the Yield to Maturity?