QUESTION 2 (10 marks) (a) Each of the bonds in the following table has a $1,000 par value and pays annual coupons. Calculate the missing values. (5 marks) Bond Coupon Years to Yield to Bond interest rate maturity maturity price (s) (% p.a.) (% p.a.) 8 7 5 ? Y 3 7 ? 970 (b) Which risk will not differ between Bonds X and Y in part (a). default fisk or maturity nisk? Why? (2.5 marks) (c) Explain what will happen to the yield to maturity and price of Bonds X and Y in part (a) if inflation is expected to increase (No calculations required) (25 marks) QUESTION 2 (10 marks) (a) Each of the bonds in the following table has a $1,000 par value and pays annual coupons. Calculate the missing values. (5 marks) Bond Coupon Years to Yield to Bond interest rate maturity maturity price (s) (% p.a.) (% p.a.) 8 7 5 ? Y 3 7 ? 970 (b) Which risk will not differ between Bonds X and Y in part (a). default fisk or maturity nisk? Why? (2.5 marks) (c) Explain what will happen to the yield to maturity and price of Bonds X and Y in part (a) if inflation is expected to increase (No calculations required) (25 marks)