The following describes a AAA-rated Plain Vanilla bond with a coupon of 6%, and a maturity of 10 years from today.

Question 1a:

Assuming that you purchase the bond today, if the bond trades with a face value of $1000, what is the value of the bond on the secondary market at the end of year three on your timeline if interest rates for similar bonds move from 6% down to 5%? (Assume that Today = Year 0 on your timeline).

Question 1b:

Is this bond now trading at a premium, discount, or at par value?