A seven-year, $1,000 face value bond with an 8% coupon rate and semiannual coupons is trading with an YTM at 7%. These yields are quoted as APRs with semiannual compounding.

(a) What price will the bond trade for?

(b) Suppose you purchase this bond today (at the price you find in part a) and sell it at the end of year 2 when the market rate, YTM for this bond declines to 6%. What would be your periodic internal rate of return (holding period return)?