Consider a bond paying $100 at the end of every year for 20 years at the end of the 20 years the bond pays $1000. Suppose 2 years after you purchase this bond you you can sell it for $1600(That is just paid its second coupon)
a) Assume constant interest. For how much did you purchase the bond?
b) How much should you sell it for 2.5years after the purchase date?(that is your half way between the second and third payment)