Consider a 7-year bond that pays an annual coupon rate of 3%. Evaluate the validity of the following statements:

1. If the yield to maturity (markets required rate of return) is 2% this bond will be priced at a premium.

2. If the yield to maturity (markets required rate of return) is 6%, this bond will be priced at par.

a) Only 2 is true.

b) Only 1 is true.

c) Both 1. and 2. are false.

d) Both 1 and 2 are true.