Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has 3 years until maturity.
a. Find the bond's price today and 6 months from now after the next coupon is paid. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
Current price ............................$
Price after six months........................................ $
b. What is the total (6-month) rate of return on the bond? (Omit the "%" sign in your response.)
Rate of return ........................%