Decimal places (when relevant): please keep 2 in all calculations. For interest rates, keep 2 digits in the form of 3.xx% unless otherwise specified.

PLEASE SHOW ALL WORK! WITHOUT FINANCIAL CALCULATOR and NO EXCEL

If you are not going to answer all the parts to the question please leave it for someone else. THANKS

2. a. Suppose a ten-year, $1,000 bond with semiannual coupons has a price of $1,077.95 and yield to maturity of 5%. What is the bond's coupon rate?

b. Suppose a ten-year, $1,000 bond with a 7% coupon rate and semiannual coupons is trading for a price of $1,074.39. What is the YTM on the bonds? (Write down the expression for YTM and then use a financial calculator or a spreadsheet program to find the answer)

c. Consider a five-year bond with 7.5 percent annual coupon, currently selling at par. Your estimate of its yield to maturity a year from today is 7.5% per year. Suppose you plan to sell your bond at the end of one year, right after receiving your coupon payment. What is your expected return on bond investment?

Note: You don't need to use a calculator to answer this question, if you have sufficient knowledge on bond. Explain how you reach your answer.

d. Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. (Assume annual compounding). You hold the bond for five years before selling it. If the market interest rates are 4% when you sell it,

1. what are the prices of this bond when you buy it and sell it?
2. how much money have you gained or lost?
3. what is the 5-yr holding period return?
4. what is your annual holding period return?

5. Suppose a bond with a yield to maturity of 6% is selling at par. What is the value of each semiannual coupon payment?