The annual percentage rate (APR) is 10% compounded semi-annually. You are considering purchasing a US Treasury bond that has a face value of $1000, a 4% coupon (nominal rate), and matures in 10 years. Coupons are paid semi-annually and the next coupon payment is exactly six months away.

2.a

What is the current price of this bond?

2.b

What is the effective annual rate that corresponds to the 10% APR? What is the effective monthly rate?

2.c

What is the price of the bond if the next coupon payment is in 3 months, and the bond has 9 years and 9 months to maturity. note: coupons are still paid semi-annually.