Mark buys a bond on February 1, 200(N). The bond has a face value of $1,000 and the annual coupon rate is 3%. Interest is paid on January 1 and July 1 of each year. It expires on January 1, 200(N+8). It was issued on January 1, 200(N).


a) What is the total amount of the transaction if the semi-annually compounded nominal rate of return required is 5%?

b) What is the market value of the bond when purchased on February 1, 200(N)?