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Six months ago, you purchased a $100,000 bond issued by Sparky Fire Corporation. The bond has a 4% coupon rate, and 9 years to maturity.

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Six months ago, you purchased a $100,000 bond issued by Sparky Fire Corporation. The bond has a 4% coupon rate, and 9 years to maturity. The bond makes semi- annual coupon payments, and, at the time of purchase, had a yield-to-maturity of 3% annual rate, compounded semiannually. a. Calculate price (per hundred dollars of face value) you paid for the Sparky Fire bond. b. Today, after noticing that the yield has dropped to 2.60% annual rate, compounded semiannually, you sell the bond. What is the current price per hundred dollars of face value? c. Calculate your holding period yield from the purchase and subsequent sale of the bond. Hint: The holding period yield is defined as the interest rate that sets the price of a bond equal to the present value of the realized cash flows the investor received from holding the bond. (The holding period yield will equal the yield to maturity for an investor who buys a bond and holds the bond until maturity)

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