3. On 17 June you can buy a CD maturing 176 days with a face value of $6,000,000 with a yield to maturity of 2.68%. You can also purchase for $5,950,000 an identically risky CD with the same time to maturity and the same payment on maturity of $6 million. Provide calculations to show which is your best option.

5. The inexperienced finance trainee at Mugs-R-Us plc. Says that the can save the company money on its forthcoming issue of ten-year bonds. The rate of return required for bonds of this risk class in the financial markets is 10% and yet I overheard our investment banking adviser says, We could issue a bond at a coupon of only 9%. I reckon we could save the company a large sum on the $100 million issue. Do you agree with the trainees logic? If yes or not. Why? Provide calculation in the answer if needed to be shown.