Question: 10. Consider a five-year bond with a face value of $500 paying annual coupons at a rate of 7% p.a. which has a current yield

10.

Consider a five-year bond with a face value of $500 paying annual coupons at a rate of 7% p.a. which has a current yield to maturity of 5% p.a. If interest rates remain unchanged, what is most likely to happen to the bond's price one year from today?

Group of answer choices

The price will be lower.

The price will be higher.

This cannot be determined without additional information.

The price will remain unchanged.

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