Sometimes the coupon rate on a bond is slightly different from the market rate, because the market rate changes just days before the bond is to be sold. For example, suppose that a certain city issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (assuming annual payments). The yield to maturity on this bond on the day that it was issued was 6%.

a.) What was the price of this bond when it was issued?

b.) Assuming the investors yield remains constant, what is the price of the bond immediately before and after it makes its first coupon payment?