IIB The purchase of a bond You have three options to buy financial assets. You have only $1,000 to spend on bonds. Your opportunity cost of money is 5%; all required compounding is performed one time per year. All rates of return and interest rates are stated as an annual rate. Assume that all broker fees are zero. Option A. You pay $1,000 today for buying US one-year bonds. In one year you expect to receive $1,100 from selling the bonds in the US Option B You can buy a foreign bond from a broker. You will pay $1,000 today to buy foreign currency, all of which will be used to buy foreign one-year bonds with a foreign interest rate of 8% per year on the bonds' value at the time of purchase. The foreign exchange rate today is 4 f per dollar. In one year the foreign exchange rate is 6f per dollar. You convert back inot US dollars in one year. You are willing to accept the expected value and prices as the fair price. a. Which financial asset would your purchase today; option A or option B? Explain and justify your answer. b. List the factors that could change and force you to change your selection of the option. Use a separate page for each problem. Label each part. Properly label your graphs and tables that you present