Question $5$

You are considering a bond that has a face value of $1,000$ and matures in $10$ years. During the

first three years, coupons will be paid semi$-$annually at the end of each period, with a coupon rate

of $4\mathrm{.}5\%$ per year compounded semi$-$annually. During the last seven years, coupons will be paid

semi$-$annually at the end of each period, with a coupon rate of $6\mathrm{.}5\%$ per year compounded semi$-$

annually. Calculate the current price of the bond, if the yield to maturity remains at $5\mathrm{.}5\%$ per

year compounded semi$-$annually throughout the entire $10-$year period. Show your calculations.