Question 12 On 01 January 2000, McDonald's Corp. issued a 7% semi-annual coupon bond with $1,000,000 par with a maturity date of 30 years. The current yield is at 10% p.a. Required: (a) What is the fair price of this bond and what is the periodic coupon payment? (5 marks) (b) Due to the Corona virus outbreak and its effects on the food industry, the government proposed a rate-cut policy in December 2019 that went into effect starting 01 January 2020. The policy requires a reduction in the interest rate from 10% to 8%. What effect will this have on the present value of the bond? Compare the present value with and without the interest rate cut and comment. (10 marks) (c) What can you conclude about the relationship between bond prices and their yields ? (5 marks) (Total: 20marks)