(a) What happens to the price of a 1 year bond with a face value 1,000 and a coupon of 8% when the interest rate decreases from 8% to 6%. [5] (b) Calculate the present value of the following: (i) A perpetuity with a face value of 100 and a coupon of 6% where the interest rate is 10% and the 1st payment is made at the end of year 1. (ii) A perpetuity with a face value of 100 and a coupon of 6% where the interest rate is 10% and the 1st payment is made at the end of year 10. [3] (iii) A 9 year annuity with a face value of 100 and a coupon of 6% where the interest rate is 10% and the 1 st payment is made at the end of year 1. [4]