Question 3 (total of 21 Marks) Today's date is 17 March 2021. Consider the following debt securities. Official Cash Rate: is 0.75% Bank Bill 1: A bank bill with a face value of $1.25 million, which has 3 days to maturity and is trading at a yield of 0.72% Bank Bill 2: A bank bill with a face value of $2.97 million which has 127 days to maturity and is trading at a yield of 0.87% Bond 1: A bond with a face value of $0.82million with maturity of 24 March 2027, paying coupons semi-annually at a rate of 2.15% and trading at a yield of 1.62% p.a. Bond 2: A bond with a face value of $98.5 million, which matures on 17 October 2027, paying coupons semi-annually at a rate of 2.35% trading at a yield to maturity of 1.66% p.a. Required a Describe the shape of the yield curve. b What is the fair market price for. (1 mark) (0) Bank bill 1 (1 marks) Bank bill 2 (1 marks) (iii) Bond 1 (4 marks) (iv) Bond 2 (4 marks) c Two hours after you purchase these four securities, stronger than expected employment data is released to the market and the market reacts by selling off (ie prices fall and yields rise) in a parallel movement in yields by 0.15% across the entire yield curve and you liquidate your holdings. How much profit or loss did you generate on each debt security? (0) Bank bill 1 (1 marks) Bank bill 2 (1 marks) (11) Bond 1 (4 marks) (iv) Bond 2 (4 marks)