As a portfolio manager you need to make decisions about how to invest funds. A client tells you they will need their funds in 3 years. You could decide to invest in a 3-year bond or you could invest in a shorter maturity bond then reinvest the funds in the future into another bond. If you chose to invest the funds a 2-year security then reinvest the funds into a 1-year security 2 years from now, what must be the forward rate on the 1-year security? Maturity Spot rate 1 year 5% 2 years 5.5% 3 years 6% 6,4% 0.7.3% 0 7.9% O 7.0% You recently purchased a corporate bond at a YTM of 8% and paid a price of $112 for it. During your analysis you determined the bond has a duration of 2.84. Due to positive news about the issuing company, the YTM on the bond dropped to 7.5%. How will the change in YTM affect the price of the bond? O decrease by $1.31 Increase by $123 increase by $1.47 o decrease by $1.82