Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with five years to maturity (YTM) has a coupon rate of 5%. the yield to maturity of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note.

a) 928,884 b) 789,551 c) 585,197 d) 1,114,661

Complete the following statement based on your calculations and understanding of semiannual coupon bonds:

Assuming that interest rates remain the constant, the T-note's price is expected to ______.

a) increase b)decrease