Please answer these questions completely from A to F if you can. Thanks

2. This question is about bonds [50 marks] Company XYz has four bonds outstanding (denoted A, B, c and D). each with face value 100. The following facts are known about bonds A, B and C: Bond A: zero coupon bond with one-year maturity and price 95.290. Bond B: two-year maturity, with annual coupon payments. coupon rate 4% and current price 96.730; Bond c: three-year maturity, with annual coupon payments and coupon rate 5% a) [10 marks] Using bonds A and B. how would you construct a synthetic zero- coupon bond with face value 100 and two year maturity? What would be the price of this bond? b) 15 marks] If the forward rate between years two and three is 7%, compute the price of bond C. c) 15 marks] Given that the yield to maturity of bond c is 6.16%, compute the modified duration of bond C. If the yield on bond C rises by 0.10%. by how much would its price fall based on the modified duration? The following is known about bond D It has three-year maturity, with annual coupon payments and coupon rate 10%; It contains a call feature: company XYZ, at its discretion, is entitled to call (that is, to repurchase) bond D from bondholders at a price of 102.00 in one year's time. This amount must be paid in addition to the coupon payment which is due on that date. d) [10 marksJ If forward rates are perfectly indicative of future interest rates, will company XYZ decide to call bond D? Why or why not? e) [10 marks] Under the assumption that XYZ will call bond D. what is bond D's fair market value today? [10 marks] Suppose you hold bond D, and company XYZ calls bond D. Suppose also that you reinvest the proceeds from the repurchase of Bond D at the rates that prevail in the market today until three years from today. What will be your total return at the end of your investment period