12) The present value of annuity of 5400 received at the beginning of everythree months for ten years, where the required rate of return is 8 percent per annum compounded quarterly, would be: a) $16111.03 b) $11611.03 c) $11161.03 d) $10611.03 13) What price would a fund manager be prepared to pay to purchase a 60 day T note if the current yield on this instrument was 8.25% per annum with a $1000 of face value? a) $989.62 b) $987.62 c) $986.62 d) $985.62 14) Negotiable certificates of deposit: a) pay interest, as they are interest-bearing accounts at a bank b) have a longer maturity date than promissory notes c) have little liquidity in the secondary market d) are short-term securities, issued by banks for financing purposes 15) The purpose of hedging by a company is to: a) minimise the variability of expected cash flows b) maximise cash flows and profits c) decrease the uncertainty of reported cash flows d) increase the expected cash flows Section B: Long Answer Questions (total 45 marks) Question 16 (14 marks) An AA rated corporation has issued debentures each with a face value of $1000, with fixed-interest annual coupon of 9 per cent per annum and a maturity of 3 years. Th debenture currently sells for $1080.19 a) Show that the market yield on the bond is 6%. (5 Marks) b) What is the duration for the above bond