A2 8 c 8. You have just received an inheritance of $20,000. You wish to invest in fixed income securities such as bonds, which you think are less risky than stocks. After some research, you have...

A2 8 c

8. You have just received an inheritance of $20,000. You wish to invest in fixed income securities such as bonds, which you think are less risky than stocks. After some research, you have narrowed down your choices to the following three fixed income securities:

One-year Treasury Bill:

Face value of $1000

Yield to maturity of 1.74%

Coupon Bond A:

Two years to maturity
Face value of $1000
Coupon rate of 3%, with semi-annual coupon payments
Price multiple of face value = 1.0189

Coupon Bond B:

Five years to maturity
Face value of $1000
Coupon rate of 3.5%, with annual coupon payments
Yield to maturity of 2.51%

All yields to maturity are compounded semi-annually.

c. What is the price of Coupon Bond B?