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2) (4 marks) A $100,000 bond that pays quarterly coupons is purchased at a price P on June 1, 2020 to yield j2 = 8.08.

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2) (4 marks) A $100,000 bond that pays quarterly coupons is purchased at a price P on June 1, 2020 to yield j2 = 8.08. The coupon rate for the first 4 years is j4 = 4% and then the coupon rate increases to j4 = 6% thereafter. The bond is redeemable at par on December 1, 2028. Calculate P, the purchase price

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