A 5-year 6.5% annual coupon bond is selling to yield 7%. The bond pays interest annually. The par value of the bond is $100.

a. What is the price of the 5-year 6.5% coupon bond selling to yield 7%?

b. What is the price of this bond one year later assuming the yield is unchanged at 7%?

c. Suppose that one year later the yield of the bond decreases to 6.7%. What is the price change attributable to moving to maturity assuming no change in the discount rate? What is the price change attributable to a decrease in the discount rate from 7% to 6.7%? What is the total price change?