1. Greenbrier Industrial Products' bonds have a 7.60 percent coupon and pay interest annually. The face value is $1,000 and the current market price is $1,062.50 per bond. The bonds mature in 16 years. What is the yield to maturity?
A. 6.94 percent
B. 7.22 percent
C. 7.46 percent
D. 7.71 percent
E. 7.80 percent
2. What is the value of the bond above if you buy it at $1,062.50 with exactly 16 years remaining and immediately after purchase the Federal Reserve decides to increase interest rates by 100 basis points (aka 1%) in an emergency session. The rates rise across the yield curve and investors now demand 100 basis points higher yield from Greenbrier as well. What will be the (closest) new expected price of this bond?
A. $1,302
B. $1,176
C. $1,063
D. $970
E. $888