3. A 30 year Treasury bond is paying an annual coupon of 4% is sold for a price reflecting a yield to maturity of 4%. Two years pass. In the first year, the interest rate increases by 25 basis points. In the second year, the interest rate remained unchanged. Assuming a flat term structure and holding all other factors constant, the bond's price during this two-years period would have (a) Remained constant (b) Decreased and then increased (c) Increased and then decreased (d) Cannot be determined with the data given