$(10\%)$ BOND

A bond has $10$ years until maturity and a coupon rate of $5\%$ payable annually, and the market interest rate is $3\%$ compounded annually.

a$.$ What is the current market price of the bond?

b$.$ What is the current yield?

c$.$ Suppose one year from one, you need to sell this bond because of liquidity reasons. Suppose the yield to maturity is $4\%$ when you sell the bond, what will the price be$?$

d$.$ What will be your before tax rate of return?

e$.$ If inflation rate is $3\%,$ what is your before tax real rate of return?

f$.$ Give two possible reasons why you may not want to sell the bond even if you can get a positive rate of return.