Question: a. Consider a five -year semi-annual bond issue by Financial Institution OMEGA of Oakland California. The Face value of the bond is $1,000 dollars, the

a. Consider a five-year semi-annual bond issue by Financial Institution OMEGA of Oakland California. The Face value of the bond is $1,000 dollars, the coupon rate of the bond is 12% and the ongoing market interest rate is 12%. Calculate the value of the bond, USING THE TIMELINE APPROACH, the Current Yield, the Yield to Maturity and the Capital Gains Yield respectively.

b. Economic conditions change in the country and the ongoing rate of interest increases to 14%. Calculate the value of the bond, USING THE TIMELINE APPROACH, the Current Yield, the Yield to Maturity and the Capital Gains Yield respectively.

c. A new President is elected, and the discount rate drops to 8%. Calculate the new value of the bond, USING THE TIMELINE APPROACH, the Current Yield, the Yield to Maturity and the Capital Gains Yield respectively.

d. Carefully draw the Bond Path over the five-year period and properly explain your answers.

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