Assignment Question An investor in bond has approached a bond analyst to ask him a few questions concerning his investment in fixed income : A. His investment in bond A has the following information Par Value $4000 Coupon 8% Maturity 4 years YTM 6% a. Graphically show if the bond is trading at premium or discount b. Calculate the value of the bond if the coupon is paid annually c. Calculate the value of the bond if the coupon is paid semi-annually d. If the market value of the bond is $4150, what will be the yield to maturity of the bond? e. What are the key characteristics of a bond ? f. If risk increases by 3% and inflation decreases by 2% in the current year, calculate value of the bond? g. What effect does inflation and risk have on price of bond? h. Calculate the current yield of bond A. Part B Bond B has the following information Par Value Coupon YTM Maturity $1500 8% 5% 4 years Market Value $ 1650 Is this bond overvalued or undervalued? Show by calculation