Fitzwilliam Darcy buys a bond one month before a coupon is due to be paid. The bond has a face value of $1,000 and an 8% coupon rate. There are 42 semi-annual coupons remaining. The bond is priced at a YTM of 7%.

Fitzwilliam keeps the bond for fourteen years and two months. He then sells the bond. The YTM at time of sale has risen to 8.5%. While the bond was in his possession he deposited all coupons received into a bank account earning interest of J2 = 6%.

a. What was the purchase price of the bond? [2]

b. What was the selling price of the bond? [2]

c. How much was in Fitzwilliams bank account at the time of sale? [3]

d. What was her HPRR expressed on a per annum compounded twice a year basis? [3]