4. National Pharmaceutical SAOC issued two bonds. Bond 1 has an annual coupon rate of 7 per cent and Bond 2 has an annual coupon of 11 per cent. Bond 1 matures in three years and Bond 2 matures in five years. Both bonds have a par value of OMR 100. Assume that the yield to maturity on bonds of this risk class is 9 per cent. Required: a. How much would you pay for the bond 1 and Bond 2? (10 marks) b. What is the flat yield on bond 1 if it is selling at OMR 103? (2 marks) c. What is the flat yield on bond 2 if it is selling at OMR 97? (2 marks) d. What is meant by flat yield? Why do we calculate flat yield? (125-150 words) (4 marks) BUSS 23001 (OP) Page 2 of 8 Principles of Financial Investment (BUSS 23001) - Spring 2020 -CW2 - QP e. Based on your answers in band c, which bond is offering better flat yield and why? Briefly explain. (75 - 100 words) (2 marks)