A bond is just issued with exactly 10 years to maturity. It pays a quarterly coupon of 6% per annum. The current yield is 6% per annum. The face value is $1000.

(I) What is the price of the bond today?

(II) Will the bond be traded at a discount or a premium if the yield immediately increases to 7%? Why?

(6+2) = 8 marks

please show all working out of both, not on calculator, in writing, thankyou.