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Problem 3 (24 marks) On November 15, 2022, you consider investing in Colonels Inc and have obtained the following information from the company's financial statements:

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Problem 3 (24 marks) On November 15, 2022, you consider investing in Colonels Inc and have obtained the following information from the company's financial statements: Notes to the financials: Bond A - was issued at a quoted price of 95.0, pays its 6% coupon semi-annually and a face value of $1,000. Bond B - was issued at par, pays its 5% coupon semi-annually and a face value of $1,000. a) Calculate the market rate of interest (YTM) for Bond A on November 15, 2021, when the bond was issued. ( 6 marks) b) Calculate the market rate of interest for Bond B on November 15, 2018, when the bond was issued. (1 mark) c) If the market interest rate for Bond A on November 15,2022 is 4.5% (APR), calculate the price of Bond A in the market. Show your work. (5 marks) d) Calculate the current yield on November 15,2022 for Bond A. (1 mark) e) If an investor bought Bond A when it was first issued on November 15, 2021 and sold the bond on November 15, 2022 for the price calculated in part c, what is their annual holding period return? Show your work. (5 marks) Fall 2022 Assignment #3 1 f) Suppose on November 15, 2020, bonds with similar risk to Bond B were yielding 7.5%. Calculated the quoted price for Bond B on November 15,2020 . ( 6 marks)

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