2. The manager of Rosfeld Fund Co. is evaluating three different bonds. Both the face value of bond A and B are $1000 and mature in 3 and 5 years, respectively. The face value of bond C is $500 and mature in 3 years. The coupon rate of bond A, B and C are 10%, 8% and 10%, respectively. Currently, the market prices of bond A, B and C are $ 1020, $ 1000 and 600, respectively. Required: 1) If the return rate on similfr-risk bonds is 6%, which bond is worth to be invested265 marks) 2) Explain your choice. (4 marks) 3) In the future, if the interest rate is expected to drop, which one has more interest rate risk? (4 marks) 4) Explain the relationship between interest rate and bond price. (5 marks) (18 marks) 2 2 2