A U.S. Treasury Bond (face value of $1,000) which has 5 years left until maturity and a

coupon of 3.5% (paid semi-annually) is trading at a price of 95.10 in the market.

a. What is the yield to maturity for this bond?

b. If market interest rates decline by 1.0%, what is the change in the value of

the bond?

c. Assume instead that this is a zero coupon bond. Given the yield that you

calculated in a) what would be the current price of this bond?