A 10-year, 11.00%, $5,000 bond that pays dividends quarterly can be purchased for $4,551.

This means that $4,551 is spent on the bond now. Every quarter, $137.50 is provided to the purchaser as the dividend.
After 10 years, $5,000 is given to the purchaser.

If the bond is purchased and pays as scheduled, which of the following ranges of effective rate of return will the purchaser receive?

Show how an open market sale affects the Fed's balance sheet and also the balance sheet of the commercial bank of the purchaser of the bond sold by the Fed.

An investor has purchased 10-year bonds, with a face value of $11,000. Interest at 8% is paid quarterly. If she desires to earn 12% nominal interest (compounded quarterly), what would the purchase price have to be?

A bond was purchased for $1000. Quarterly interest payments of 3.50 have been received. After 18 months the bond was sold for $1243.51. What is the annual effective interest rate earned on this bond?

Please show a step by step solution to the problem.