CASE A (30 Marks) John Handy is the owner of a successful clothes store in Miami. Although John is an excellent entrepreneur he is fascinated with finance and gets involve in a lot of trading in stocks and fixed- income securities and in particular bonds. His fascination has led him to manage his own portfolio which has grown significantly. His expertise has given him a good grasp of the more advanced strategies and techniques in finance. John is thinking of immunizing a large portion of his fixed income portfolio. He is planning to en-cash this part of his portfolio in approximately seven years and use it to buy a boat. In an effort to achieve this John has identified four corporate bonds, each with a $50,000 investment, totalling $200,000. The par value of these bonds are $1,000 The bonds are listed as follows and are ANNUAL coupon bonds: A A7.5% coupon bond priced at $895 with 12 years to maturity B. A zero-coupon bond priced at $405 with 10 years to maturity C. A 10% coupon bond priced at $1,080 with 10 years to maturity D. A 9.25% coupon bond priced at $980 with 15 years to maturity Immunisation is concept/strategy that is used to protect fixed-income instruments against the risk of interest rate fluctuations. The duration concept is the basis of immunization theon. Therefore if the duration is less than the target period then the bond is considered immunized. Questions 1. Based on the information provided above, find the current yield and yield to maturity for each bond (8 marks)