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RISK, RETURN AND BOND VALUATION QUESTION Note: Kindly answer in typed words... not in excel and handworked a) Consider three 30-year bonds with annual coupon

RISK, RETURN AND BOND VALUATION QUESTION

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Note: Kindly answer in typed words... not in excel and handworked

a) Consider three 30-year bonds with annual coupon payments. One bond has a 10% coupon rate, one has a 5% coupon rate, and one has a 3% coupon rate. If the yield to maturity of each bond is 5%. The bond has a per RM1000 face value. Assess bond trades at a premium, which trades at a discount, and which trades at par. b) Based on above scenario, calculate the initial price of this bond if it has a 5% yield to maturity. If the yield to maturity is unchanged, what advice would you recommend immediately before and after the first coupon is paid? Justify your

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