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You invested $100,000 in a fixed semi-annual coupon bond when these bonds were issued by Forest Investors Limited. The details of this bond, on issue, are as follows:

Bond price: 100 (the price per $100 of face value)

Coupon rate: 9.00% per annum, compounded half yearly

Term to maturity: five years

Use a financial calculator where appropriate.

(a) After two years, yields to maturity on identical securities are 8.00% per annum, compounded half yearly. What is the price of this Forest Investors bond in the market?

(b) find out your annual holding period return over the first two years.

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