WITCI GOUOm wou jouTCOINC company coccccci (3 marks) Question 2 Kitty Con vengie is consider of purchasing three types of bond with 10% coupon rates, with annual payment. All three bonds are currently selling par value $1,000. The bonds have different maturity with short-term bond maturity of 5 years, the intermediate-term bond has maturity 10 years, and the long-term bond has maturity 25 years. (a) Determine the value of all three bonds if the required returns increase to 9% and decrease to 7%. (12 marks) (b) If Vengie is afraid of interest rate risk, which bond should she purchase? Justify your answer. (3 marks) Page 3 of 5 BBFN1014/Set A/FA 2 8 Times