At t=0, you purchase a 4-year, 5 percent regular coupon bond (paid annually) that is priced to yield 6 percent per year continuously compounded. The face value of the bond is $1,000. The bond issuer is the U.S. government (no liquidity risk).

You are also given that your holding period (investment horizon) equals to the maturity of the bond (t=4 years).

Suppose that the market interest rate decreases 5.5 percent continuously compounded during the first year of your purchase (within year 1), and it remains at that level till the maturity of the bond.

Assume that, the reinvestment rate for the first coupon payment is the new interest rate, that is, 5.5 percent continuously compounded. In addition, you will reinvest the coupon payments in a zero-coupon bond.

What is the your total proceeds (sum of face value and amount of reinvestment of coupon payments)at the end of your investment horizon (t=4) years?