Q3. Perbadanan Nasional Berhad (PNB) Malaysia owns the following corporate bonds with annual interest payments and RM1,000 principal Company A Coupon Company B Coupon 7% Company C Coupon Company D Coupon 16% Company E Couporn Company F Coupon 0% (zero coupon bond) 7% 5 years Maturity Maturity Maturity 5 years Maturity Maturity Maturity 20 years 20 years 16% 20 years 0% (zero coupon bond) 5 years (a) Determine the price of each bond if the current interest rate is 10 percent. (6 marks) (b) Analyze the duration of each bond. (12 marks) (c) Rank the bonds in terms of price fluctuations as judged by each bonds duration in part (b). Start from the least volatile bond first till the most volatile (2 marks) bond. This question paper consists of 4 questions on 8 printed pages. FOI (d) If interest rates rise to 13 percent, reconfirm your volatility rankings by determining the percentage change in the price of each bond. Appraise whether the bonds volatility ranking in part (d) is similar as the ranking in part (7 marks) (e) Assess the strengths and drawbacks when determining the bond's duration. (3 marks) [Total: 30 marks]