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Mohamad's broker has shown him two bonds. Each has a maturity of 5 years, a par value of RM1,000, and a yield to maturity of

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Mohamad's broker has shown him two bonds. Each has a maturity of 5 years, a par value of RM1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6%, paid annually. Bond B has a coupon interest rate of 14% paid annually. (a) Calculate the selling price for each of the bonds. (10 marks) (b) Mohamad has RM20,000 to invest. Judging on the basis of the price of the bonds, how many of either one could Mohamad purchase if he were to choose it over the other? (Mohamad cannot really purchase a fraction of a bond, but for the purpose of this question, assume that Mohamad can.). (10 marks)

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