A 1,000 bond paying a 5.5% annual coupon

A 1,000 bond paying a 5.5% annual coupon (at the end of the year), has three years left to maturity and has a discount rate of 7.5%

Refer back to question above. suppose the default risk on the bond increased. If follows the discount rate would _____ and the present value would _____

A. increase, decrease
B. increase, increase
C. decrease, increase
D. decrease, decrease