1. You purchased a bond on January 1, 2017 which matures in 9 years on December 31st, 2025. The bond has a par value of $1,000, a stated coupon rate of 7.5% and pays interest semi-annually. On January 1, 2021, the bond sells for $1,055.00. What is its yield to maturity?

5.72%

7.35%

6.20%

7.33%

2.You have two bonds in your portfolio, Bond Y and Bond Z. Bond Y matures in 9 years and Bond Z matures in 3 years. They both have the same coupon rates. If interest rates increase or decrease which bond would you expect to have the largest change in their market price?