Assume the government issues a semi-annual pay bond that matures in 5 years with a face value of $1,000 and a coupon yield of 10 percent.

(a) What price would you be willing to pay for such a bond if the yield to maturity (semi- annual compounding) on similar 5-year governments were 8%?

(b) What would be the price if the yield to maturity (semi-annual compounding) on similar governments were 12%?

(c) If the price of the bond is 103 19/32 per $100 of face value, what is the yield to maturity?

(d) Suppose you held the bond in (c) for 6 months, at which time you received a coupon payment and then sold the bond for a price of 102 (per $100 of face value). What would be the annualized holding period return?