Question: PLEASE DONT WRITE THIS IN EXCEL, PLEASE BY TYPING OR HANDWRITING, Thanks! 8. [10 marks] Mr. Simpson buys a $1000 bond paying semi-annual bond interest

PLEASE DONT WRITE THIS IN EXCEL, PLEASE BY TYPING OR HANDWRITING, Thanks!

8. [10 marks] Mr. Simpson buys a $1000 bond paying semi-annual bond interest at i(2) = 6.5% and redeemable at par in 20 years. Mr. Simpson's desired yield rate is ;(2) = 7%. (a) [5 marks] How much did he pay for the bond? (b) (5 marks] After exactly 5 years, he sells the bond. Interest rates have dropped and the 2 bond is sold to yield a buyer i(2) = 6%. Determine the sale price

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