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Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0.0% 10 B 0.0% 15 4.2% 15 D 7.8% 10 Which of the bonds A to Dis most sensitive to a 1% drop in interest rates from 6.5% to 5.5%? Which bond is least sensitive? ASE Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 5.7%. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 5.7% when you sell it, what is the internal rate of return of your investment? b. If the bond's yield to maturity is 6.7% when you sell it, what is the internal rate of return of your investment? c. If the bond's yield to maturity is 4.7% when you sell it, what is the iternal rate of return of your investment? d. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. be Marlite Engineering would like to raise $10.0 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1 000 and a coupon rate of 6.51% (annual payments). The following table summarises the yield to maturity for five-year (annual-payment) coupon corporate bonds of various ratings: Rating AAA AA BBB BB YTM 6.15% 6.39% 6.51% 6.95% 7.51% a. Assuming the bonds will be rated AA, what will the price of the bonds be? b. How much of the total principal amount of these bonds must Marlite issue to raise $10.0 million today, assuming the bonds are AA rated? (Because Marlite cannot issue a fraction of a bond, assume that all fractions are rounded to the nearest whole number.) c. What must the rating of the bonds be for them to sell at par? d. Suppose that when the bonds are issued, the price of each bond is $959.55. What is the likely rating of the bonds? Are they junk bonds