1. Today you paid $100 for a 5-year bond that has a 10% coupon. Assume the bond makes coupon payments every six months. a. Compute the yield on the bond. One year later, the yield on comparable bonds has fallen to 2.5% per six months b. What will the price of the bond be in one year? c. If you sold the bond one year after you purchased it, after rates have fallen, what would your gross holding period return be?

Today you paid $100 for a 5 -year bond that has a 10% coupon. Assume the bond makes coupon payments every six months. a. Compute the yield on the bond. One year later, the yield on comparable bonds has fallen to 2.5% per six months b. What will the price of the bond be in one year? c. If you sold the bond one year after you purchased it, after rates have fallen, what would your gross holding period return be