Question 1: on February 25, 2023, the Financial Times reported that last year was the worst for bond markets in more than a century. Global bonds lost 31% and UK bonds fared even worse, returning minus 39 percent. The bond market return data reported by the Financial Times came from the 2023 edition of Credit Suisse's Global Investment Returns Yearbook. To illustrate the performance of one area of the UK bond market last year, let's consider a specific long-dated UK government bond (Gilt). The par value for this Gilt is 100, the coupon rate is 0.5% and the coupon payment frequency is semi-annual. On December 31, 2021, this Gilt had a 40-year maturity and was priced at 84.4488 with an 0.97% yield. One-year later, on December 31, 2022, the yield had increased by 260 basis points to 3.57%. 

a) Calculate the price for this Gilt on December 31, 2022, using the 3.57% yield.

b) How did much did the price of this Gilt change in 2022?

c) What do you observe about the price and the performance of this Gilt in 2022?