Exactly ten years ago a company issued bonds with a par value of $1,000, a 10% annual coupon and a maturity of 30 years. (The yield to maturity for the bonds was 10% when they were issued.) The bonds pay interest semi-annually. Market interest rates have fallen and the yield to maturity on these bonds is now 8%.

(a) What would you expect the price of one of these bonds to be currently?

(b) Without doing further calculations, answer this question: If interest rates in general rise and the yield to maturity on these bonds increases, what would you expect to happen to their price?