Company Amando Corporation is looking to inbest in one of the following two bonds:

Bond 1

Face value

100,000.00

Maturity 10 years

Coupon rate

4%

Credit rating

AA

Offer Price

97.100.00

Bond 2

Face value 100.000.00

Maturity 5 years

Coupon 6%

Credit rating

Offer Price

BBB

98.500.00

The yield curve of BAM is as follows:

Maturity

1 year

3 years

5 years

7 years

10 years

Market Interest rate

3,5%

4,25%

5%

5,5%

6%

1) Which bond will you choose?

2)Calculate the price of bond 1 after 3 years.

3) Calculate the price of bond 2 after 2 years.