Problem #3 - Part A: This problem is a multi-step (two parts) problem. Part A: At t=0, you purchase a six-year, 7 percent coupon bond (paid annually) that is priced to yield 6 percent annually compounded (YTM = 6% annually compounded). The face value of the bond is $1,000. The bond issuer is the U.S. government (no liquidity risk). [In the previous problem (P2), you already computed the bond price.) You are also given that your holding period (investment horizon) equals to 5.12 years (t=T=5.12 years). Suppose that the market interest rate increases to 6.875 percent annually compounded (increase by 87.5 basis points) during the first year of your purchase (within year 1), and it remains at that level (6.875 percent) for the next five years. Assume that, the reinvestment rate for the first coupon payment is the new interest rate, that is, 6.875 percent annually compounded. In addition, you will reinvest the coupon payments in a zero-coupon bond. What is the total amount (total proceeds) in US Dollars in your investment account at the end of your investment horizon (t=5.12) years? Total proceeds include both the reinvestment of coupons plus the face value. (Round-off to four decimal places, to obtain as accurate answer as possible on Canvas.)