a. Singtel recently issued a graded investment bond. The bond has a $1,000 par value which will mature in 12 years time. It has a coupon interest rate of coupon of 11% and pays interest annually. As an investor, you are to determine the following:

i. Calculate the value of the bond if the required rate of return is 11 percent.

ii. Calculate the value of the bond if the required rate of return is 15 percent.

iii. Based on the above findings in part (i) and (ii) above, and discuss the relationship between the coupon interest rate on a bond and the required return and the market value of the bond relative to its par value.

iv. Identify two possible reasons that could cause the required return to differ from the coupon interest rate. (4 marks)

b. Housing and Development Board (HDB) Ltd also currently sells corporate bonds to investors for $1,120. The coupon rate is 15 percent and par value of $1,000. Interest is payable annually, and maturity period is for 10 years. To provide income stability, you want to find out the following:

i. Current Yield

ii. Yield to maturity

iii. Explain the relationship that exists between the coupon interest rate and yield to maturity and par value and market value of a bond.