Six months ago you purchased a $100,000, 2% coupon bond with 7 years to maturity. The bond makes semi-annual coupon payments, and, at the time of purchase, had a yield-to-maturity of 2.40%, annual rate, compounded semiannually.
a) Calculate price (per hundred dollars of face value) you paid for the bond.
b) Today, after noticing that the yield has dropped to 2.10%, you sell the bond. What is the current price (per hundred dollars of face value)?
c) Calculate your gains or losses, and holding period yield from the purchase and subsequent sale of the bond.