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Bonus Problem 1 (Optional, 30 marks) The following table shows the market information of three straight term bonds available in the market. Bond term Face

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Bonus Problem 1 (Optional, 30 marks) The following table shows the market information of three straight term bonds available in the market. Bond term Face value Redemption Coupon Market value rate price (Frequency) Bond A n years 2000 2200 5% 2075.3 (Annual) Bond B 2n years 1000 1100 1180.6 (Annual) Bond C 3n years 1000 1100 5% 1150.2 (Annual) An investor wishes to invest his/her capital in one of the above bonds. Which bond should he choose? Explain your answer. 5%

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