Question 3 (25 marks) Peter Au is studying two bonds. Blue Bond is a premium bond making semiannual payments. The bond pays a coupon rate of 7.4%, has a Yield To Maturity (YTM) of 6.8%, and has 13 years to maturity. Red Bond is a discount bond making semiannual payments. This bond pays a coupon rate of 6.8%, has a YTM of 7.4%, and also has 13 years to maturity. (a) Calculate the price of each bond today. (6 marks) (b) (8 marks) If interest rates remain unchanged, calculate the expected prices of each bond in 8 years and in 13 years. (c) (6 marks) Describe and explain the changes in bond prices with the years to maturity. (d) (5 marks) Peter found a US Treasury callable bond is priced at 100.125, paying a coupon rate of 9.125%, but has a -2.15% YTM. Explain how it is possible