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2. Suppose a 5% coupon, 5-year bond is selling for $1100. The coupon is paid every six months. The principal value is $1000. (1) Calculate

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2. Suppose a 5% coupon, 5-year bond is selling for $1100. The coupon is paid every six months. The principal value is $1000. (1) Calculate the yield to maturity of this bond. (7 marks). (Hint: Use the Yield function in Excel.) (2) Calculate the price of this bond if the yield to maturity increases by 1% with maturity unchanged. (7 marks). (3) Calculate the price of this bond if the yield to maturity decreases by 1% with maturity unchanged. (6 marks)

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