Aiman is considering investing in corporate bonds. The following are the relevant data for him to evaluate:

------------------Shah Bond --------- Alam Bond

Coupon rate - 12% per annum 12% per annum

Maturity date- 10 years -------8 years

Market interest rate -16% per annum -- 8% per annum

------Annually compounded--- Semiannually compounded

Par value - RM1,000 RM1,000

Market price- RM936 RM1,190

Calculate the maximum price Aiman should pay for each bond? If the market price of each bond is as stated above, which bond should he buy? Explain why? From your answers above draw a diagram showing the relationship of the bonds prices and the interest rate (15 marks)