For this question you should answer without calculations. A $1000 corporation bond with semi-annual payments has the following characteristics: Coupon Yield to maturity Time to maturity Macaulay duration 9% 8% 10 years 7 years

A) State whether the bond price should be higher than, less than, or equal to $1000. Briefly explain.

B) Explain why duration is less than the time to maturity.

C) Suppose the bonds coupon rate were 6 per cent instead of 9 per cent. Indicate whether duration should be higher than, lower than, or the same as 7 years. Briefly explain.