Supposs that you bought a 4 - year 1 4 % semiannual coupon bond today. Par value

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Question:

Supposs that you bought a $4 -$ year $14 %$ semiannual coupon bond today. Par value of the bond is $ $1, 000 .$ One year ago this bond had a maturity of $5$ years and sold for $ $1, 200 .$ The required rate of retim for this bond today is $2 %$ higher $($ compounded semiannually $)$ than it was I year ago. $($ Hint: try interest rate between $4 %$ to $6 %$ in this question $)$

a $.$ What is the price of the bond today?

b $.$ Suppose you hold the bond for $2$ years and then sell it at an interest rate of $10 %$ compounded semiannually. At what price will you sell the bond in two years?

c $.$ What would be the actual rate of retum that you earned during the $2 -$ year holding period?