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In January 2008, you purchased a XYZ bond with 9 years until maturity. The bond has an annual coupon rate of 9% and pays coupons semiannually (the first coupon will be paid in June 2008). It has a par value of $1,000 (if you need to calculate the semiannual return based on annual return, you can simply divide the annual return by 2). (a).What's the price of the bond in January 2008 with annual YTM of 8%. N- PMT- %, FV- , therefore, the price of the bond in January 2008 is (keep two decimals) $ (b). In 2008-2009, you received four coupons, first in June 2008 and last in December 2009. Assume the market yield dropped to 7% (annual rate) in 2008 and 2009 after you purchased the bond. By considering reinvestment risk, what is the future value of four coupons at the end of 2009 (December 2009)? N- PMT- % (keep two decimals), PV= therefore, the future value of four coupons at the end of 2009 is (keep two decimals) S (c). You experienced a huge loss during 2008-2009. In December 2009, you decided to sell the XYZ bond right after receiving the fourth coupon. At that time, the market yield dropped to 7% (annual rate). What's the price you could sell the bond at? N- PMT % (keep two decimals), FV- , therefore, the price of the bond in December 2009 is (keep two decimals) $ (d). What is your two-year HPR for this two-year investment by using the answer in (a), (b) and (c) (consider price and reinvestment risks)? End price in HPR calculation (keep two decimals)S beginning price in HPR calculation (keep two decimals) FV of cash flow in HPR calculation considering reinvestment risk (keep two decimals)-S therefore, the two-year HPR for this two- year investment is (in %, keep two decimals) % In January 2008, you purchased a XYZ bond with 9 years until maturity. The bond has an annual coupon rate of 9% and pays coupons semiannually (the first coupon will be paid in June 2008). It has a par value of $1,000 (if you need to calculate the semiannual return based on annual return, you can simply divide the annual return by 2). (a).What's the price of the bond in January 2008 with annual YTM of 8%. N- PMT- %, FV- , therefore, the price of the bond in January 2008 is (keep two decimals) $ (b). In 2008-2009, you received four coupons, first in June 2008 and last in December 2009. Assume the market yield dropped to 7% (annual rate) in 2008 and 2009 after you purchased the bond. By considering reinvestment risk, what is the future value of four coupons at the end of 2009 (December 2009)? N- PMT- % (keep two decimals), PV= therefore, the future value of four coupons at the end of 2009 is (keep two decimals) S (c). You experienced a huge loss during 2008-2009. In December 2009, you decided to sell the XYZ bond right after receiving the fourth coupon. At that time, the market yield dropped to 7% (annual rate). What's the price you could sell the bond at? N- PMT % (keep two decimals), FV- , therefore, the price of the bond in December 2009 is (keep two decimals) $ (d). What is your two-year HPR for this two-year investment by using the answer in (a), (b) and (c) (consider price and reinvestment risks)? End price in HPR calculation (keep two decimals)S beginning price in HPR calculation (keep two decimals) FV of cash flow in HPR calculation considering reinvestment risk (keep two decimals)-S therefore, the two-year HPR for this two- year investment is (in %, keep two decimals) %

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