1) Consider two bonds with identical face value of $100 that pay semiannual coupons. You have the following information:

Bond	Coupon Rate	Maturity	YTM
A	6.0%	5 years	5.5%
B	7.0%	15 years	6.0%

Compute the price of bonds A and B.

Suppose that you have $100,000 that you want to invest in bonds. Six months later, bond A trades for $103, and bond B trades for $109. Compute your annualized HPR if:

You invest everything in A

You invest everything in B

You allocate 60% to bond A and 40% to bond B

(You can assume that you can buy fractions of each bond if necessary).