Question: You are interested in purchasing a bond that has a face value of $1,000. The bond will mature in 20 years and will pay the

You are interested in purchasing a bond that has a face

You are interested in purchasing a bond that has a face value of $1,000. The bond will mature in 20 years and will pay the following coupons: During the first five years, no coupons will be paid During the subsequent 10 years, coupons will be paid semi-annually at the end of each period. Coupon rate will be 1.00% per year compounded semi-annually During the last five years, coupons will be paid semi-annually at the end of each period. Coupon rate will be 3.00% per year compounded semi-annually Calculate the current price of the bond, assuming that the yield to maturity remains at 2.50% per year compounded semi-annually throughout the entire 20-year period. Show your calculation

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