Note: The bonds have a $100 face value. The interest rates are annual interest rates with semi-annual compounding and the coupon rates are also annual rates which are paid semi-annually.

Question: The forward rate is specified for the next year: r(0.5)=7% and r(1)=8%. There is also a 9% coupon bond that is maturing 1 year from now,

Part a) What is the bond price?

Part b) What is the price of the bond price at t=0.5 suppose at t=0.5, the half year spot rate is 8%?