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QUESTION 6 [10 MARKS] (a) Explain FOUR (4) reasons that influence the changes which make debt security yields vary. [6 marks] (b) If a government

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QUESTION 6 [10 MARKS] (a) Explain FOUR (4) reasons that influence the changes which make debt security yields vary. [6 marks] (b) If a government bond is expected to mature in two years and has a current price of RM950, calculate the bond's interest rate/yield if it has a par value of RM1,000 and a promised coupon payment rate of 10 percent. [2 marks] (9) From part (b) above, briefly explain the bond price/value if the interest rate/yield moves up (increase). Why? [2 marks]

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