A $1,000 bond with a coupon rate of 7% paid semiannually has two years to maturity and a yield to maturity of 6.9%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?

A. rise by $14.87

B. fall by $17.84

C. rise by $20.82

D. fall by $ 14.87

2. JRN Enterprises just announced that it plans to cut its next-year dividend,Upper D1, from $2.00 to $1.00 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 6% per year and JRN's stock was trading at $25.50 per share. With the new expansion, JRN's dividends are expected to grow at 12% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to:

A. $54.26

B.$12.75

C. $108.52

D. $ 25.50