A 30-year 8% corporate bond pays coupons semi-annually. The face value of the bond is $1000. Immediately after the bond was issued, the fed announced it was going to try to lower interest rates, and the market started using a 7% rate to discount the bond instead of 8%.

Is the price of the bond going to be higher or lower than face value now that interest rates have decreased to 7%?

(please insert one of the 3 in the blank) higher lower same

_________

What is the price of the bond after the interest rate decreases to 7%? (in $, rounded to the cent)

$_____