Question: Problem 2 (27 points) Suppose you hold a 6.30 percent coupon bond with a par value of $1,000, that matures in 30 years and pays

Problem 2 (27 points) Suppose you hold a 6.30 percent coupon

bond with a par value of $1,000, that matures in 30 years

Problem 2 (27 points) Suppose you hold a 6.30 percent coupon bond with a par value of $1,000, that matures in 30 years and pays semi-annual coupons. 2) You believe that in one year, the yield to maturity will be 6.85 percent. Without making any calculations, answer the following: a. Will the bond price increase or decrease from its current market value? Explain why. (3.5 points) b. Will the price be higher or lower than $1,000? Explain why. (3.5 points)

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