1) You are a financial director of the Supertrooper Corporation that has two bonds outstanding. Both have nominal value of $100 and both are paying coupon of 8% p.a. semiannually. Maturity of bond A is 10 years, while bond B has 3 years to maturity.

a) Calculate prices of both bonds assuming the required rate of return is 10 % p.a.

b) Calculate prices of both bonds assuming the required rate of return has changed to 6 % p.a.

c)Construct a three years loan that would be able to cover your financial needs for repayment of the bond B. Interest rate will be 12% p.a., annuity payments will be paid twice a year.