QUESTION 4: 20 POINTS The following table shows 4 coupon bonds. All bonds have same face value of $100, and same coupon rate of 10%. Today at time t), you buy bonds, which are held for one year. Next year (at time t+1), you sell the bonds. Today (at time t), interest rate is 20%. Suppose next year (at time t+1), interest rate decreases to 15%. Answer the following questions. Round your result to 2 decimal places. at Price t+1(5) Rate of Capi-Rate of Re- tal Gain (%) turn (%) NA Bond No. Years to Ma-Current Price at t ($) turity at t Yield (at t) (%) 20 NA $51.30 $58.08 #3 NA NA (1) For Bond # 1: what is price next year? (3 points) $76.14 34.52% 31.10% NA NA NA NA NA (2) For Bond # 2: what is current yield? (3 points) (3) For Bond # 2: what is rate of return? (3 points) (4) For Bond #3: what is price next year? You are given the following information: 1.22 = 1.44, 1.23 = 1.73, 1.24 = 2.07, 1.25 = 2.49, 1.152 = 1.32, 1.153 = 1.52, 1.154 = 1.75, 1.155 = 2.01. (3 points) (5) For Bond # 4: what is price this year? (3 points) (6) For Bond # 4: what is price next year? (3 points) (7) If today, you know for sure that interest rate would decrease in the future, would you want to buy longer-term bonds or shorter-term bonds? Why? (2 points)