1. Calculate the value of a 5 year 1% coupon bond with semiannual payments, 1000 par. Expected return is the risk free rate of 3%. Please use 5 decimal places.

Note: Please show your calculation without excel

2.

For this question the inflation rates are actual inflation levels ( so a 6 month inflation rate increase of 3% increases par by 3%, not 1.5%.)

You have a semiannual treasury inflation protected security, which is 1000 par and sells at par, with a 4% coupon rate. If the inflation rates are: 2% for the first 6 months and then 0.8% for the second, 1% for the third and 1% for the fourth 6 months, find:

-the individual nominal payments made for each time period

Report the total amount paid including par (all coupons and par, total dollar value) (do not use $ in the answer)