Q3) A one-year, $100,000 loan carries a coupon rate 12 percent and a market interest rate of 15 percent. The loan requires payment of accrued interest and one-half of the principal at the end of six months. The remaining principal and the accrued interest are due at the end of the year. a. What will be the cash flows at the end of six months and at the end of the year? b. What is the present value of each cash flow discounted at the market rate? What is the total present value? c. What proportion of the total present value of cash flows occurs at the end of six months? What proportion occurs at the end of the year? d. What is the duration of this loan? Q4) Two bonds are available for purchase in the financial markets. The first bond is a two-year, $1,000 bond that pays an annual coupon of 10 percent. The second bond is a two-year, $1,000 zero-coupon bond. a. What is the duration of the coupon bond if the current yield to maturity (YTM) is 9 percent? 12 percent? 15 percent? b. How does the change in the yield to maturity affect the duration of this coupon bond? c. Calculate the duration of the zero-coupon bond with a yield to maturity of 8 percent, 10 percent, and 12 percent. d. How does the change in the yield to maturity affect the duration of the zero coupon bond? e. Why does the change in the yield to maturity affect the coupon bond differently than it affects the zero-coupon bond?