'''Yes - '''you should backup ''- Ideally you always keep a current backup.''
'''Yes -''' you have to format the new drive GUID single partition in order to install the OS
You '''boot to your install disk''', format the new disk using disk tools, do the install, after installing you restore from backup. Or ''- if you have an external case you could put the old drive in it it, skip the backup but after the install use Migration Assistant to transfer your old apps and data to the new drive.''
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