bUEsTIoN FOUR A newly hired financial manager walks into a boardroom and makes her presentation about managing the company's excess funds. She suggests that the company should consider buying bonds using surplus funds. The whole boardroom burst into laughter, wondering why the company should waste the company's funds on something free. The CEO made it clear to the young executive that she should not waste their time. The young executive recollected herself and spoke at length about the difference between a police bond and the bonds she was proposing for the investment. She talked about the par bond, discount bonds, premium bonds and other types. She further spoke about the bony yield and Macauley's effective yield. Then the meeting got interested, but it was not easy to make sense of all the new terminologies, which led the forum to ask the graduate so many questions and she also got mixed up. Help the young executive answer questions raised by the meeting: a] What are the different types of bonds? b} Why should a company invest in bonds? c] Howr is the price of a bond determined? [Use an example of a 10-year bond with a face value of 100,000, and a coupon rate of 8%, computed twice a year}