QUESTION 3 [G marks] An investor buys a 180-day $100 000 bank bill for $96 323.35, and sells it 30 days later for $96 724.61 (at a yield of 8.24 p.a., simple interest). a [2 marks] How much of the dollar return on the investment (i.e., the difference between the sale price and the purchase price) may be at- tributed to capital gain or loss? b. [2 marks] Explain what this capital gain or loss represents. c. [2 marks] Explain why the interest component of the dollar return must always be positive. QUESTION 4 [7 marks] a [3 marks] A 10-year 8% Treasury bond has duration equal to 6 years when the market yield is 17.10% p.a. compounded half-yearly. The bond's price at this yield is $57.110 (per $100 face value). Use the bond's duration to estimate its price (per $100 face value, rounded to 3 decimal places) at a market yield of 17.09% p.a. compounded half-yearly. b. [2 marks] Suppose you have a fixed liability that you must pay at the end of 6 years. When the yield today is 17.10 p.a. compounded half-yearly, what amount of fixed liability at the end of 6 years could be immunised by buying $100 000 face value of the 10-year 8% Treat sury bond referred to in a.?" (Calculate the amount of fixed liability rounded to the nearest whole dollar.) c. [2 marks] Do you agree or not agree with this statement made by a finance student? Explain why. If two bonds with the same term to maturity and the same yield have different coupon rates, the one with the higher coupon rate will have the higher (longer) duration