PARTT8 THEORETICAL PROBLEMS 1.Suppose that the price of discount (zero coupon) bonds maturing in years 1, 2, 3, 4, and 5 are given (respectively) by Price Time to Maturit 940 870 800 715 630 4 Consider the following risk-free investments. Which is best? T-0 4 Investment A -40 20 15 10 Investment B 10 10 15 20 2.Three zero coupon risk-free discount bonds of one, two and three year term to maturity are selling for, respectively, $950, $890 and $800. What would be the selling price today of a 10% coupon bond of 3 year maturity (maturity value $1,000)? Consider a coupon bond, period t- 0 price $900, with payments: t-0 1 23 50 50 1050 Discount (zero coupon) bonds of 1, 2 and 3 years maturity (all with maturity value of $1000) sell for respectively, 960, 900, 820 dollars. Is this coupon