A 25000 5-year bond has seal-annual coupons of 850 an, Finance Basics

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A 25000 5-year bond has seal-annual coupons of 850 an

Question: A $25000 5-year bond has seal-annual coupons of $850. An investor buys the bond at a price that gives a return to maturity of i^(2) = 0.07 (or 3.58 per six months).

A. Find the purchase price.

B. One month after the 4th coupon payment, the investor sells the bond to a new investor at a price that gives the new investor a return of i^(2) = 0.07. Find the price paid by the new investor. (Show your steps.)

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