a) Bond A is a bond with a 12 per cent coupon and bond B is a bond with a 6 per cent coupon. Both bonds make annual payments, have a yield to maturity of 9 per cent, a face value of 1000, and five years to maturity. What is the current yield for bond A and for bond B? Describe the relationships that exist between the coupon rate, the yield to maturity, and the current yield for bond A and for bond B. [12 Marks] b) What is the effective annual yield if bond A and bond B make semi-annual coupon payments instead of annual? Why is it important to know the effective annual yield in this case? [5 Marks] c) Discuss how the real interest rate, the expected future inflation, the interest rate risk, and the default risk affect the shape of the term structure of interest rates. [8 Marks]