This question has several parts. Read and work through each part carefully (you have done similar exercises in the homework and lecture videos, here it is just gathering all those parts together in one multi-part problem). Basically, you will have to do some calculation for each of parts (a) (c) and then you can answer part (d). Cascading errors will be penalized.

(a) 5 years ago you bought a Reliance Bond (Reliance is an Indian publicly listed firm) with 100 par value, 6% annual coupon rate, priced to yield 3.5% (annual rate). What is its price? (4)

(b) Since you bought the bond, you have deposited the coupons in a bank at 2% rate of return a year. Compute your total return from the coupons currently. (4)

(c) Today you sell that bond at 5% yield (annual rate). At what price can you sell it? (4)

(d) What is the actual dollar return you made on this bond?

(e) Bonus points (extra credit): What is the annualized rate of return on your investment?