A company should pay liabilities of 1,000 due 6 months from now and another 1,000 due one year from now. There're two available investments.
a. 6 month bond; 1000 face amount; 5% nominal annual coupon rate convertible semi annually with a 6% yield rate converted semi annually.
b. 1 year bond; 1000 face amount; 5% nominal annual coupon rate convertible semi annually with a 6% yield rate converted semi annually.
Find the amount of each bond to purchase and the total cost of the bonds