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6. [10 points 2.5pts, 2.5pts. and 5 pts., respectively.] Suppose you would like to buy today a five-year, $1000 bond with a 5% coupon rate
6. [10 points 2.5pts, 2.5pts. and 5 pts., respectively.] Suppose you would like to buy today a five-year, $1000 bond with a 5% coupon rate and semi-annual coupons. The bond was issued exactly one year earlier today. The current market interest rate on similar bonds is 6%. A. What should the price of this bond be today? B. Suppose that you hold the bond until its maturity, what should be your total rate of return on this bond? C. Now, suppose you bought the bond at its fair price today and one year later you sell the bond for $878.34. When you sell: (1) What is the bonds nominal yield? (2) What is the bond's yield to maturity? (3) What is the bond's current yield? (4) What is your total return on the bond, all other things being equal? (5) If your personal tax rate is 20% and the annual inflation rate is expected to be 2%, what is your after-tax real rate of return
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