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Please show step by step solutions. Problem # 5 : A 1 0 - year bond has face value ( redemption value ) $ 4

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Problem #5: A 10-year bond has face value (redemption value) $400,000 and quarterly coupons of 2.5%. Consider the time
right after the 12 th coupon has been paid, when the yield is 4.8%.
(a) What is the price of the bond?
(b) Compute the price of the bond if the yield were to increase by 1 basis point (a basis point is 1100 of 1%).
What is the absolute value of the difference between that price, and your answer to part a)?
(c) Would the yield have to increase or decrease in order for the bond to increase in value by $872.38?
(d) Based only on your answer to b), approximately how many basis points (bp) would the yield have to move in
order for the bond to increase in value by $872.38?
(Answer as a positive integer.)
Problem $5(a) :
Answer correct to 2 decimals.
Problem #5(b):
Answer correct to 2 decimals.
(A) Decrease (B) Increase
Problem #5(c):
Problem #5(d):
Answer as a positive integer
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