a)Briefly discuss the differences between corporatisation and privatisation of public assets.

b)Briefly explain two arguments for and two against the privatisation of public assets.

c)An investment bank purchased a Treasury bond at a government bond auction today. This bondhasexactly 5 years to maturity and will pay annual coupons of 2% per annum. All bonds in this issue (i.e. Treasury bonds with a coupon rate of 2% per annum paid yearly with 5 years to maturity) are currently trading in the bond market now at their face value of $1,000,000. Rather than just buy-and-hold this bond, the investment bank decides to strip the coupon payments off this newly issued 5 year to maturity bond to create zero coupon bond and a separate 5 year income only annuity; rights to payments from the zero coupon bond and the annuity stream will be sold to investors.

i.If the zero coupon bond created can be sold at a yield of 1.5% per annum (paid yearly), what is its principle stream worth?

ii.What is the income stream (annuity of coupons) sold for at the yield of 1.5% per annum (paid yearly)?

iii.What is the dollar (and percent) gain made by the investment bank? Briefly comment on this transaction from the investment bank's perspective.

d)Discuss the role of an underwriter in a debt or an equity capital raising.

e)Identify andbrieflyexplain the main areas within an investment bank. How do investment banks make their profits?