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A 7.5% coupon, semiannual-pay, five-year bond has a yield to maturity of 6.80%. Over the next year, if the bond’s yield to maturity remains unchanged, its price will:

A decrease.

Because the coupon rate is greater than its yield to maturity, the bond price is at a premium to par value. If the yield remains unchanged, the price will decrease toward par value along its constant-yield price trajectory.

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