Jane buys a bond with a face value of $1000, a time to maturity of ten years, a coupon of 4% pa with quarterly payments and a yield of 5.25% pa. Four year's later (immediately after the 16^th coupon has been paid), the Reserve Bank of Australia unexpectedly decreases the cash rate. The yield on Janes bond decreases to 3.44% pa and she decides to sell.

Required:

Calculate the selling price and the dollar profit or loss Jane has made on selling the bond (ignore coupons when calculating the profit), outlining why this profit or loss has occurred.