Question 1: You own a US Treasury bond with seven years remaining in its life. It has a face value of$1,000,000 and a 5% annual coupon rate. The coupons are paid every six months and the next coupon payment is exactly six months from today. The current APR is 6% with semiannual compounding. (Assume a flat yield curve so that the discount rate is the same for all investment terms.)e) (8 points) How much will the bond be worth one year from today assuming that interest rates are unchanged (i.e., 6% APR and semiannual compounding)?

Question 2: You own a US Treasury bond with seven years remaining in its life. It has a face value of$1,000,000 and a 5% annual coupon rate. The coupons are paid every six months and the next coupon payment is exactly six months from today. The current APR is 6% with semiannual compounding. (Assume a flat yield curve so that the discount rate is the same for all investment terms.)

How much will your bond be worth one year from today if the APR increases from 6% to 7% today?