Consider a bond that pays a $500 dividend once a quarter.

It pays in the months of March, June, September, and December.

It promises to do so for 10 years after you purchase it (start in January 2019).

You discount the future at rate r=0.005r=0.005 per month.

a. How much do you value the asset in January 2019?

b. Consider a different asset that pays a lump sum at its expiration date rather than a quarterly dividend of $500 dollars, how much would this asset need to pay in December 2028 (the final payment date of the quarterly asset) for the two assets to be equally valued?

c. How much should you be willing to pay if your friend bought the quarterly asset (from the main text) in January 2019 but wanted to sell it to you in October 2019?