Question 1 (20 marks) A 5% bond with semiannual coupons has a face amount of 100 and was issued on January 15 , 2010. The first coupon was paid on July 15, 2010, and the bond has a maturity date of January 15,2030 . The yield rate is i(2)=8% (a) Find the price of the bond on its issue date. Leave your answer to the nearest cent. [4] (b) Is the bond bought at a discount or at a premium? Briefly explain your answer. [2] (c) Suppose that the bond is sold for a price of 100.25 on January 15, 2021, just after a coupon has been paid, and suppose that the original bondholder was able to deposit coupons into an account earning an annual interest rate of 6% convertible semi-annually. Find the average effective annual rate of return earned by the original bond purchaser on his/her investment. Assume that interest on the deposit account is credited every January 15 and July 15. [6] (d) Find the full price and market price of the bond on October 1, 2020 using a yield rate of i(2)=4%. Leave your answers to the nearest cent. [8]