Consider a three-year bond with face value =1000 and coupon rate =10% paid quarterly. Suppose the bond price is traded at a price of 0=1025. Answer the following questions:

1. Compute both the per-period and annual yield to maturity on this bond.

2. Assume you bought this bond from this investor at the end of year 2, how much would you pay for that bond if the market interest rate is 5%?