Round two decimal places.

2. You purchase the following discount bonds with varying maturities. Bond Maturity Face Value Initial Price Cash Next Year Return A 2 years 5,000 B 3 years 5,000 5 years 5,000 D 2 years 10,000 E 3 years 10,000 F 5 years 10,000 2 years 20.000 H 3 years 20.000 J 5 years 20.000 (a) Assume an initial interest rate of 5%. Calculate the present value of each bond. (This is the initial market price for each instrument, this is your initial cost.) (b) One year later, you decide to liquidate your portfolio (all the bonds will be converted into cash.) The market interest rate is now 1%. How much cash will you receive from each of these instruments at this time? ) Calculate your one-year rate of return for each instrument. (just a simple percent calculation) (d) Carefully examine your results and then provide a narrative explaining the larger lessons you can extract from this exercise. Explain your answer in some detail