Question 2 Part 1 Richim and Poorhim have just been offered a scholarship and each month they will receive an allowance of $600 a month for a 4 year business program in UBD. Richim manages to save $300 every month and invest it in to a brokerage account that pays 12% per annum. a) How much money would Richim has at the end of the 4th year? (Assuming monthly compounding) [6 marks] b) Poorhim only started investing like Richim in the start of the year 3 . How much money would Poorhim have saved at the end of the 4th year, assuming monthly compounding? [6 marks] c) How much money would Poorhim has to invest every month in order to have the same money as Richim at the end of the 4th year? [6 marks] Part 2 i) What is the price of a Bond that is paying 9% annual coupon rate in annual payments over 10 years until it matures if the interest rate is 8%? [6 marks] ii) How would the answer to Part (1) change if it is compounded quarterly? [4 marks] iii) If there is a change in interest rate, how would that affect the price of the bond? How would you conclude the relationship between the price of bonds and interest rate? [4 marks]