Assume bond A has an annual coupon rate of 8% p.a and a maturity of 10 years. The bond is issued today and has a face value of Rp. 10,000,000.

a. Make a cash flow diagram for Bond A, if you buy the bond today

b. If 4 years from today, the average of other bonds with the same rating and maturity yields a yield to maturity (coupon) of 12%, what is the selling price of Bond A if it is sold at the end of year 4?

c. What is the average return per year you get from the strategy in letter (b) above until the end of year 4?

d. If 4 years from now, you sell it and immediately reinvest it in Bond B which produces a coupon according to the current 12% and sell it at the end of the 10th year (from now), calculate the total cash flow of the investment and arrange it in a cash diagram flow