On July 1, 2021, you are considering one of following newly issued corporate bonds: Bond A Maturity date June 30, 2031 June 30, 2036 June 30, 2031 B Coupon 8%, annual 10%, annual 8.25%, annual 4%, annual Face value Price Callable Call price $1,000 $1,000 Noncallable NA $1,000 $1,171.20 Noncallable NA $1,000 $1,000 Callable $1050 D June 30, 2031 $1,000 $731.60 Callable $1050 1) What are the YTMs on bonds A and B? Consider a situation in which the market interest rates are 1% lower than the current market rates. Contrast and explain the effects of this decline on the prices of bonds A and B. 2) Consider a situation in which the market interest rates are 1% lower than the current market rates. Contrast and explain the effects of this decline on the prices of bonds A and C. Should you prefer bond A over bond C when rates are expected to rise or to fall? 3) What is the YTM on bonds C and D? Why is the yield on bond C is higher than the yield of bond D? If you expect yields to fall substantially in the next two years, which bond (C or D) would you prefer to hold? I On July 1, 2021, you are considering one of following newly issued corporate bonds: Bond A Maturity date June 30, 2031 June 30, 2036 June 30, 2031 B Coupon 8%, annual 10%, annual 8.25%, annual 4%, annual Face value Price Callable Call price $1,000 $1,000 Noncallable NA $1,000 $1,171.20 Noncallable NA $1,000 $1,000 Callable $1050 D June 30, 2031 $1,000 $731.60 Callable $1050 1) What are the YTMs on bonds A and B? Consider a situation in which the market interest rates are 1% lower than the current market rates. Contrast and explain the effects of this decline on the prices of bonds A and B. 2) Consider a situation in which the market interest rates are 1% lower than the current market rates. Contrast and explain the effects of this decline on the prices of bonds A and C. Should you prefer bond A over bond C when rates are expected to rise or to fall? 3) What is the YTM on bonds C and D? Why is the yield on bond C is higher than the yield of bond D? If you expect yields to fall substantially in the next two years, which bond (C or D) would you prefer to hold