Suppose a company is planning to issue bonds with a par value of $1,000 each and a coupon rate of 6% per annum paid semi-annually. The bonds will mature in 5 years and have a yield to maturity of 4.5% per annum.

(a) Calculate the price of each bond. (b) Calculate the total amount of interest paid over the life of the bond. (c) If the yield to maturity increases to 5% per annum, what is the new price of the bond?

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