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~~~In Excel~~~~ Question 1. A US-Treasury bond with face value of $1,000 pays interest at an annual rate of 5%. Coupons are paid twice per

~~~In Excel~~~~

Question 1. A US-Treasury bond with face value of $1,000 pays interest at an annual rate of 5%. Coupons are paid twice per year.

a. If this bond has 4 years to mature, what is the price of the bond if current yield to maturity is 4%? Calculate this by finding the value of coupons and principal separately. (12)

b. If the coupon were instead paid once per year, what would be the price of the bond?

~~~In Excel~~~~

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