Osikani Jeffrey wants to invest in a bond. Below are some options he is considering:

Option $1$: The $18\%$ irredeemable bonds of Lorretta Plc$,$ which pays interest at six months intervals. With

a face value of GHS$100,$ the market is currently trading the bond at a $20\%$ yield. However,

Osikani Jeffrey$$s required rate of return on this bond is $19\%.$

Option $2$: The $14\%$ GHS$1,000$ face value bonds of Sualiy Plc$,$ which have $5$ years to maturity. Interest

is paid semi$-$annually. The bond will be redeemed at a $10\%$ premium. Presently, the bond is

being traded at a yield$-$to$-$maturity of $12\%.$ Osikani Jeffrey requires a return of $13\mathrm{.}5\%$ to invest

in this bond.

Option $3$: The zero$-$coupon bonds of Simathe Plc$.$ The bond is redeemable in $10$ years$$ time at par value.

With a face value of GHS$1,000,$ the bond is selling in the market at a $22\%$ yield. Osikani

Jeffrey$$s requires a $25\%$ annual rate of return to invest in this bond.

Required:

$($a$)$ Compute the intrinsic value of each bond.

$($b$)$ Compute the market price of each bond.

$($c$)$ For each bond, state whether it is overvalued, fairly valued, or undervalued by the market.

$($d$)$ Which bond would you recommend to Osikani Jeffrey? Provide the basis for your answer