Final answer:
To calculate the YTM for a bond, consider the current price, coupon payments, face value, and years to maturity. The bond has an 8% coupon with semi-annual payments and matures in 7 years. However, the current price provided seems incorrect, and with no proper current price, we can't calculate the YTM precisely.
Step-by-step explanation:
To calculate the yield to maturity (YTM) of a bond, we need to consider the current price, the coupon payments, the face value of the bond, and the time until maturity. The bond mentioned has a coupon rate of 8%, pays semi-annually, and will mature in 7 years with a face value of $1,000. The current price of the bond is $1.75, which seems to be a typo, as bond prices are typically quoted in terms of a percentage of face value, or in dollars that are a significant fraction of the face value. Assuming this price represents a significant percentage of the face value, we would however proceed with the calculations assuming a proper current price was provided.
A coupon rate of 8% with semi-annual payments means an annual coupon of $80, split into two payments of $40 every six months. Over the 7 years, there would be 14 coupon payments. The YTM calculation involves finding the discount rate that equates the present value of the future cash flows (coupon payments and face value repayment) to the current price of the bond. This typically requires solving for the interest rate in the present value annuity formula, which often necessitates the use of financial calculators or software as it's a complex calculation that cannot be easily solved algebraically.
Note: Because the question provides insufficient information (with current price likely being a typo and no correct pricing option given), a precise YTM cannot be calculated, and the answer choices provided (a through e) cannot be correctly mapped to the available information.