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Part $1$

Suppose that you are considering investing in a$4-$year bond that has a face value of $$$$1$ comma $000$ and a coupon rate of $5\mathrm{.}9\%.$

Part $2$

$$a$.)$ If the market interest rate on similar bonds is $5\mathrm{.}9\%,$ the price of the bond is $$$

$$

$1000.($Round your response to the nearest$$ cent.$)$

Part $3$

The$$ bond's current yield is

$$

$5\mathrm{.}90\%.($Round your response to two decimal$$ places.$)$

Part $4$

$$b$.)$ Suppose that you purchase the$$ bond, and the next day the market interest rate on similar bonds falls to $4\mathrm{.}9\%.$

The price of the bond will be $$$

$$

$1035\mathrm{.}54.($Round your response to the nearest$$ cent.$)$

Part $5$

The current yield will be

$$

$5\mathrm{.}70\%.($Round your response to two decimal$$ places.$)$

Part $6$

$$c$.)$ Now suppose that $1$ year has gone by since you bought the$$ bond, and you have received the first coupon payment. The market interest rate on similar bonds is still $4\mathrm{.}9\%.$

At an interest rate of $4\mathrm{.}9\%,$ the price an investor is willing to pay for the bond is $$$

$$

$1027\mathrm{.}28.($Round your response to the nearest$$ cent.$)$

Part $7$

Your rate of return on the bond was

$$

$4\mathrm{.}9\%.($Round your response to two decimal$$ places.$)$