(i) If investors have demanded an interest rate of 5 percent on the bond investment, what is the maximum prices to pay for the 1-year bond and 30-year bond? (ii) Suppose that the interest rate has increased to 20%, calculate the values of the 1-year bond and 30-year bond. (iii) Based on the calculations in parts (b) (i) and (ii) above, explain with reasons the fundamental relationship between interest rates and bond maturity. (iv) Briefly explain the meaning of the terms bonds coupon rate, current yield, and yield to maturity. (v) Explain why bonds have protective covenants.

(b) Berk Bhd issues bonds that pay interest semi-annually and have maturities of 1 year and 30 years. The bonds have a face value of RM1,000 and an annual coupon rate of 10 percent