Problem:
Consider a 10-year bond that pays a 5 percent coupon semi-annually with a face value of $1000.
Required:
Question 1: What is the price of this bond if the annualized yield to maturity of 4 percent (i.e., the stated rate is .04 compounded semi-annually)?
Question 2: What is the price of this bond if the annualized yield to maturity of 5 percent (i.e., the stated rate is .05 compounded semi-annually)?
Question 3: What is the price of this bond if the annualized yield to maturity of 6 percent (i.e., the stated rate is .06 compounded semi-annually)?
Question 4: What is the price of this bond if the annualized effective rate is 5 percent?
Note: Explain all steps comprehensively.