All calculations are Semi Annual!! ABC Inc. has three different types of bonds outstanding. Bond X carries a 6.25% coupon and has 8 years to maturity, Bond Y is a zero coupon bond also with 8 years to maturity, and Bond Z is a 6.25% coupon bond with 15 years to maturity. All three bonds currently have a YTM =10%. 1.What is todays market price for Bond X? Bond Y? Bond Z? 2.What is the true annualized yield of Bond X? Of Bond Y? Of Bond Z? (i.e., find their EARs) 3.Suppose interest rates suddenly drop, such that the yield on all three bonds declines by 200 basis points. What is the new price for each of these bonds? What is the percentage change in price of the three bonds? Explain why the percentage change in the price of Bond X is different than that of the other two bonds. 4.Suppose in the previous problem that yields increase by 200 basis points instead. Without performing any calculations, do you expect the percentage price change in the bonds to be of greater or lesser magnitude than what you calculated in problem #3? Why? What principle lies behind your answer? 5. Suppose you decide to sell Bond X 4 years from now for $880.00. What is your HPY? When you first bought the bond 4 years ago, what did you expect would to be its year 4 price?