A US Treasury Bond pays a coupon of 10%p.a. semiannually maturing in 10 years and 2 months

13. (A) A US Treasury Bond pays a coupon of 10%p.a. semiannually maturing in 10 years and 2 months. The current interest rate is 8%. The dealer is showing a market bid price at $113.8. Should the bondholder sell the US Treasury Bond to the dealer? (Demonstrate your explanation with your calculation.) (3 marks (B) Three years ago, you bought a 5 year zero coupon bond with a par value of $100 when interest rates were 7% p.a. You sold it now when interest rates became 5.5%p.a. What was the annual realised compound yield (RCY)? (3 marks) (C) An investor is investing in a bond with a 6-year maturity with 6% annual coupon at PAR. The investor plans to invest the bond for 4 years before selling it off. Assume further that in the following years interest rates follow a downtrend, so that the coupon received in year 1 is invested for three years at 4.5%; the coupon received in year 2 is reinvested for two years at 3%, and the coupon received in year 3 is reinvested for 1 year at 2%. 4 years later, the YTM of the bond is expected to increase to 8%. What's the realized compound yield (RCY) in year 4. (4 marks)