Assume an investor purchases a nine year, 6 percent annual coupon at a price equal to par. After the bond is purchased and before the first coupon is issued, interest rates increase to 6.50 percent. The investor sells the bond after five years.

a. Per $100 of par value, what is the reinvested value of the coupons at the end of the holding period?

b. Over the five year period, what is the capital gain/loss per $100 of par valuer?

c. Assuming that all coupons are reinvested over the holding period, what is the investors horizon yield over the five year period?