David Palmeridentifiedthe following bonds for investment:

1)Bond A:A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025.

2)Bond B:A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031.

3)Bond C:A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026.

The three bondswere issued on July 1, 2011.

(Each Part is Independent)

(a)If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity(EAR), calculate the market price of Bond A on July 1, 2011.[Note:Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.](6marks)

(b)Davidpurchasedthe Bond C on January 1, 2014 when Bond Cwas priced to have a yield to maturity(EAR)of 10.3812891%.DavidsubsequentlysoldBond C on January 1, 2016 when itwas priced to have a yield to maturity(EAR)of 12.550881%.Assume all interests receivedwere reinvested to earn a rate of return of3% per quarter(from another investment account), calculate the current yield, capital gain yield and the2-yeartotalrate of return(HPY)on investment forDavidon January 1, 2016.[Hint:Be careful with how many rounds of coupons has David received during the holding period and thus how much interests (coupons and reinvestment of coupons) he has earned in total during the 2-year holding period.](14marks)

(c)Davidpurchased Bond B on acouponpayment day. Bond B is priced to have a yield to maturity(EAR)of 12.36% and its market value is $1,101,058.953 onthedate of purchase. Find the remaining lifeuntil maturity(in terms of 6-month period or year)of Bond B.(5marks)